Late Payment Interest Calculator

How it adds up

Simple interest: amount × rate × days ÷ 365, counted from 1 July 2026, the day after payment was due, to 25 September 2026.

The demand letter

Fill in the blanks and it writes itself, citing the law and the figures above. Nothing leaves your browser.

[Your business name]
25 September 2026

To: [Client name]
Re: Our invoice for £2,400.00, due 30 June 2026

Dear [Client name],

Our invoice for £2,400.00 was due for payment on 30 June 2026 and is still unpaid, 87 days later.

Under the Late Payment of Commercial Debts (Interest) Act 1998, the debt carries statutory interest from 1 July 2026 at 11.75% a year: 8% over the Bank of England base rate of 3.75% in force on 30 June 2026. To 25 September 2026 that interest comes to £67.22, and it continues to build at £0.77 a day until the debt is paid.

You are also liable for a fixed sum of £70.00 as compensation for our recovery costs, £40 under £1,000, £70 from £1,000 to under £10,000, £100 from £10,000 (section 5A).

The amount now due is £2,537.22:
  Invoice: £2,400.00
  Statutory interest to 25 September 2026: £67.22
  Fixed compensation: £70.00

Please pay £2,537.22, plus interest at £0.77 a day after 25 September 2026, by 9 October 2026. If payment has not arrived by then, we will take further steps to recover the debt without further notice, and will also claim our reasonable recovery costs.

Yours sincerely,

[Your name]

The law, word for word

• “It is an implied term in a contract to which this Act applies that any qualifying debt created by the contract carries simple interest subject to and in accordance with this Part.”

  Late Payment of Commercial Debts (Interest) Act 1998, section 1(1) · checked 25 September 2026

• “Statutory interest starts to run on the day after the relevant day for the debt, at the rate prevailing under section 6 at the end of the relevant day.”

  Section 4(2) · checked 25 September 2026

• “That sum shall be– (a) for a debt less than £1000, the sum of £40; (b) for a debt of £1000 or more, but less than £10,000, the sum of £70; (c) for a debt of £10,000 or more, the sum of £100.”

  Section 5A(2) · checked 25 September 2026

• “The rate of interest for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998 shall be 8 per cent per annum over the official dealing rate in force on the 30th June (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June) immediately before the day on which statutory interest starts to run.”

  Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 · checked 25 September 2026

• It applies between businesses, not to consumers.
• If you agreed a different, substantial remedy for late payment in your contract, that replaces statutory interest (section 8).
• If your agreed payment terms were longer than 60 days and grossly unfair to you, the law can treat the debt as due at 60 days (section 4(2E)). Here the due date you enter is used.
• On top of the fixed sum you can claim reasonable recovery costs above it (section 5A(2A)).
• The Commercial Payments Bill, before Parliament on 25 September 2026, would change parts of this regime. Until it becomes law, the 1998 Act as it stands applies.

Sending invoices? Put your late-payment terms on them from day one with the free Invoice Generator, so the client has been told before it is late. And if you are good at this, other businesses pay to have it done for them: the Bookkeeping Service walkthrough turns it into a monthly fee.