Question 1

Who can claim statutory late-payment interest?

Accepted Answer

Businesses and sole traders who sold goods or services to another business or public body on credit. It does not apply to sales to consumers. In the UK the right comes from the Late Payment of Commercial Debts (Interest) Act 1998; in the EU from Directive 2011/7/EU as implemented by each member state.

Question 2

What interest rate applies in the UK?

Accepted Answer

8% a year above the Bank of England base rate. The base rate used is the one in force on 30 June or 31 December immediately before interest starts to run, and that rate then stays fixed for the life of the debt, even if the base rate later changes.

Question 3

What interest rate applies in the EU?

Accepted Answer

At least 8 percentage points above the European Central Bank's main refinancing rate. The ECB rate in force on 1 January applies to the first half of the year and the rate on 1 July to the second half, so a long-running debt can span periods with different rates. Some member states set a higher rate.

Question 4

From which day does interest start?

Accepted Answer

From the day after the payment due date. This calculator counts every day from then up to and including the date you choose. If no payment date was agreed, UK law sets a default of 30 days after delivery or invoice, whichever is later.

Question 5

What is the fixed compensation?

Accepted Answer

A fixed sum per late invoice to cover the cost of chasing it. In the UK it is £40 for debts under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more. In the EU it is at least €40. You may also claim reasonable recovery costs above that amount.

Question 6

Can I claim if my contract says something different?

Accepted Answer

If your contract sets its own substantial remedy for late payment, that usually applies instead of the statutory rate. A clause that tries to exclude late-payment interest altogether, or sets an unreasonably low rate, can be challenged. Check your terms and take advice if unsure.

Question 7

Is interest compound?

Accepted Answer

No. Statutory interest is simple interest: principal × annual rate × days late ÷ 365. This calculator rounds the result to the nearest penny or cent only at the end.

Question 8

How do partial payments affect the calculation?

Accepted Answer

Enter what has already been paid and the calculator charges interest on the amount still outstanding for the whole late period. That's a conservative simplification: it never claims more than you're owed.

Late payment interest calculator

The rules behind the numbers

United Kingdom

European Union

Questions, answered