📊 Quick Reference: UK Statutory Interest Examples
Rates below are calculated using the current UK statutory interest rate (11.75%) and include standard fixed debt recovery compensation. (Rates last updated: July 2026. Based on the Bank of England Base Rate of 3.75%.)
| Invoice Amount | Days Overdue | Statutory Interest | Fixed Compensation | Total Late Fee |
|---|---|---|---|---|
| £500 | 30 Days | £4.83 | £40.00 | £44.83 |
| £1,500 | 60 Days | £28.97 | £70.00 | £98.97 |
| £12,000 | 90 Days | £347.67 | £100.00 | £447.67 |
Frequently Asked Questions
What is statutory interest?
Statutory interest is a legally protected penalty rate that businesses, freelancers, and independent contractors can charge clients who fail to pay their invoices on time. In the UK, this right is protected under the Late Payment of Commercial Debts (Interest) Act 1998, which allows you to claim both daily interest and a fixed debt recovery compensation fee on B2B debts.
What is the current late payment interest rate in the UK for 2026?
As of July 2026, the statutory interest rate for late commercial payments in the UK is 11.75% — 8% plus the current Bank of England base rate, which the Bank held at 3.75% on 18 June 2026.
⚖️ 2026 Legislative Update: On 19 May 2026, the UK government introduced the Commercial Payments Bill in the House of Lords, aiming to stop businesses "contracting out" of the 8% + base rate interest and to make compensation owed automatically once a client misses the 30-day dispute window.
How is late payment interest calculated in the UK?
Take your daily interest amount and multiply it by the number of days the payment is overdue: (Annual Rate ÷ 365) × Principal × Days Overdue. The calculator above handles this automatically.
Are late payment interest and compensation subject to VAT?
No. Statutory interest and debt recovery compensation are punitive legal remedies, not a supply of goods or services, so VAT does not apply when you itemize them on an updated invoice.
How much fixed statutory compensation can I claim?
Under UK law you can claim a fixed sum in addition to daily interest, tiered by invoice size: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more.
What is the EU Late Payment Directive?
Directive 2011/7/EU protects European businesses from late payments with a reference rate plus 8% penalty and a guaranteed minimum flat fee of €40 for debt recovery costs. A stricter proposed Regulation stalled and was dropped in 2025; the 2011 Directive remains the current legal standard across EU member states.
Can I charge interest if there is no written contract?
Yes. If you supplied goods or services and the other business accepted them, a commercial contract exists even without paperwork. If no payment term was agreed, the law defaults to a 30-day window from invoice receipt or delivery, after which interest begins to accrue.
Do these rules apply to creative freelancers and sole traders?
Yes. The UK and EU commercial debt acts apply broadly to all B2B transactions — freelancer, sole trader, or limited company all have the same right to charge interest and claim compensation from corporate clients.
How do I add this late fee to my client's bill?
Once you have the figures, issue an updated invoice or a formal demand note. Use the Free Invoice Generator to create a fresh invoice listing the original principal alongside a new line item for statutory late payment interest & compensation.
Related Tools & Guides
- Free Invoice Generator PDF — create clean invoices with zero signup required.
- How to Handle Freelance Contract Violations Legally
- The EU Late Payment Directive — full guide.