The invoice
Your claim
Day-by-day breakdown
| Item | Amount |
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Suggested wording for your demand letter
How the calculation works
UK businesses have a statutory right under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended in 2013) to charge interest and fixed compensation on overdue B2B invoices, even where the contract is silent on the point.
1. Statutory interest
Interest accrues daily at the Bank of England base rate plus 8 percentage points, calculated on the unpaid net (pre-VAT) amount, pro-rata from the day after the invoice was due until the day it is paid. The formula is:
interest = unpaid amount × (base rate + 8%) × days overdue / 365
So a £2,500 invoice at a 4.5% base rate, 30 days late, accrues £2,500 × 12.5% × 30 / 365 ≈ £25.68.
2. Fixed compensation
On top of the interest, the Act lets you claim a one-off fixed sum per overdue invoice:
- Up to £999.99 → £40
- £1,000 to £9,999.99 → £70
- £10,000 and above → £100
Only one fixed sum applies per invoice, no matter how late it is.
3. Recovery costs (if needed)
If the fixed sum doesn't cover your reasonable costs of recovering the debt (e.g. you paid a debt collector), you can also claim the excess as a separate head of loss. Most freelance chasing falls within the fixed sum, so we don't add a recovery cost line by default.
Worked examples
Inputs: £500 invoice, due 14 days ago, BoE base rate 4.5% → statutory rate 12.5%.
Interest: £500 × 12.5% × 14 / 365 = £2.40.
Fixed compensation: invoice under £1,000 → £40.
Total claimable: £500 + £2.40 + £40 = £542.40.
The £40 fixed sum dwarfs the interest on small invoices — which is exactly the point of the tiered structure. It makes chasing a £500 invoice worth your time.
Inputs: £5,000 invoice, 45 days past due, BoE base rate 4.5%.
Interest: £5,000 × 12.5% × 45 / 365 = £77.05.
Fixed compensation: invoice in £1,000–£9,999.99 band → £70.
Total claimable: £5,000 + £77.05 + £70 = £5,147.05.
Inputs: £20,000 invoice, 90 days past due, BoE base rate 4.5%.
Interest: £20,000 × 12.5% × 90 / 365 = £616.44.
Fixed compensation: invoice over £10,000 → £100.
Total claimable: £20,000 + £616.44 + £100 = £20,716.44. At this size, the interest is the meaningful number — and is a clear signal to issue a formal statutory-interest notice.
Any business (sole trader, partnership, limited company) supplying goods or services to another business under a UK commercial contract. The right does not apply to consumers (B2C debts), to public bodies in some narrow exempt categories, or to wholly intra-group transactions. The right applies even if the contract says nothing about late payment.
Contracts can vary the rate, but only if the alternative provides a "substantial remedy" for late payment. A clause that excludes interest entirely or sets an unreasonably low rate is unenforceable — the statutory rate applies anyway.
From the day after the agreed payment date in your contract. If no payment date is agreed, the default period is 30 days from the later of (a) the invoice date or (b) the date the goods/services were received. Interest can be claimed from day 31 onwards in that default case.
Either is fine. Many freelancers send a separate "statutory-interest notice" letter that itemises the original invoice, the days overdue, the interest, the fixed compensation, and a new total. We include suggested wording above. The notice doesn't have to follow a prescribed form, but it should clearly invoke the Act so the client understands you're exercising a statutory right.
Yes. The right survives full payment of the original invoice. You have 6 years from the date the cause of action arose to bring a claim for the interest and compensation (5 years in Scotland under the Prescription and Limitation (Scotland) Act 1973).
It becomes a contractual dispute. For most freelance amounts (under £10,000) the practical route is Money Claim Online (MCOL) — the small-claims version of the County Court — for around £35–£455 in court fees depending on claim size. Most invoices are settled before that stage once a Letter Before Action is issued. See our guide to chasing unpaid invoices for the full escalation ladder.
For statutory purposes, the rate is fixed for each six-month reference period: use the rate that was in force on 31 December (for debts that became overdue 1 Jan–30 Jun) or 30 June (for debts that became overdue 1 Jul–31 Dec). This calculator uses a single rate for simplicity — for a long-running unpaid debt that spans a rate change, calculate each reference period separately and add the results.
No. It implements the published statutory formula and worked examples from gov.uk to give you a reliable estimate of what you can claim. For a debt where you're contemplating court action, take the figures here as a starting point and check them with a solicitor or your trade body (FSB, IPSE) before issuing a formal Letter Before Action.
This calculator estimates statutory interest and fixed compensation on overdue UK B2B commercial debts under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended). It does not cover consumer debts, debts under £40 of fixed compensation thresholds in some exempt categories, or contractually-varied interest schemes. Not legal advice — check your contract terms and, for substantial sums, take professional advice before issuing a formal demand or claim.