Late Payment Interest Calculator (UK)
Compensation is claimable in addition to interest, automatically, the moment the debt becomes late — it does not require chasing or a court order to accrue (though enforcing payment may still require one).
How late payment interest works for freelancers
Under the Late Payment of Commercial Debts (Interest) Act 1998, UK freelancers and businesses can charge statutory interest and fixed compensation when a client pays a commercial debt late. This right applies automatically for business-to-business (B2B) debts — it does not apply to consumer customers (e.g., individual clients not acting as a business).
The statutory interest rate is set at 8 percentage points above the Bank of England base rate. As of the June 2026 Monetary Policy Committee (MPC) meeting, the base rate is 3.75%, giving a statutory rate of 11.75% per year. The base rate is reviewed eight times a year by the MPC, so this figure may become outdated after future meetings. This tool uses the rate in effect as of June 2026 — always check the current base rate before relying on these numbers.
Interest accrues daily from the day after the due date until the date payment is received. You do not need to chase the client or include a penalty clause in your contract — the law gives you this right automatically. In practice, many freelancers add the interest and compensation to a follow-up invoice or chaser email to encourage faster payment.
The fixed compensation amounts are: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999, and £100 for debts of £10,000 or more. This compensation is claimable at the same time as interest and does not require the client's agreement or a court order to accrue — though you may still need to take legal action if the client refuses to pay.
Important note: This tool provides an estimate based on the standard statutory defaults. It is not legal advice. If your contract specifies a different contractual interest rate or a different remedy for late payment, that may override the statutory provisions. Recipients should always seek professional legal advice if in doubt.
Frequently asked questions
Does this apply to consumer customers?
No. The Late Payment of Commercial Debts Act applies only to business-to-business (B2B) commercial debts. If your client is an individual paying for personal services (e.g., a consumer), you cannot use this legislation. You would need to rely on any terms in your contract or other consumer credit laws.
Can I charge both interest and the fixed compensation?
Yes. The Act allows you to claim both the statutory interest and the fixed compensation sum. They are separate remedies that accrue automatically once the debt becomes overdue. You do not need to choose one over the other.
What if my contract says something different?
If your contract includes a contractual interest clause (e.g., "2% per month on overdue amounts"), that may replace the statutory interest rate. The Act allows parties to agree an alternative remedy, as long as it does not leave the creditor worse off. As of writing, there have been legislative proposals (2026) to restrict the ability to contract out of the statutory scheme — this area of law is evolving, so check current guidance if your contract differs.