UK Commercial Debt Law

UK Statutory Late Payment Interest Calculator

Calculate legal statutory interest at Bank of England base rate + 8% and claim £40, £70, or £100 fixed compensation under the Late Payment of Commercial Debts Act 1998.

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Invoice & Interest Parameters

Official UK commercial debt statutory formula

Original Invoice Debt Amount (£)

Original Due Date

Calculation / Settlement Date

Bank of England Base Rate (%)Current Official: 5.00%

+ 8.00% statutory margin = 13.00% total p.a.

Letter & Invoice Metadata (Optional)

UK Statutory Entitlement45 Days Overdue

Principal Balance:£3,500.00

Statutory Interest:(13.00%)

+£56.10

Fixed Compensation:(£1k-£10k tier)

+£70.00

Total Amount Legally Due

£3,626.10

Accruing at £1.25 per calendar day

Transfers these exact line items directly into the free invoice generator.

Formal Statutory Late Payment Demand Letter

Ready-to-send formal 7-day statutory notice citing UK commercial law.

FORMAL NOTICE OF STATUTORY LATE PAYMENT COMPENSATION & INTEREST
UNDER THE LATE PAYMENT OF COMMERCIAL DEBTS (INTEREST) ACT 1998 (AS AMENDED)

Date: 18 October 2026
To: [Client / Company Name]
From: [Your Business / Freelancer Name]
Reference: Invoice INV-2026-001

Dear Accounts Department / Commercial Director,

This formal communication serves as statutory notice regarding Invoice INV-2026-001, which was due on 2026-09-03 and is currently 45 days overdue.

Under the Late Payment of Commercial Debts (Interest) Act 1998 and the Late Payment of Commercial Debts Regulations 2002/2013, commercial suppliers have a legal statutory entitlement to claim interest and debt recovery compensation on late commercial payments.

STATUTORY CLAIM BREAKDOWN:
---------------------------------------------------------------------------------
1. Principal Debt Outstanding:            £3,500.00
2. Statutory Interest Accrued:            £56.10
   (13.00% per annum: Bank of England Base Rate 5.00% + 8.00% statutory margin over 45 days)
3. Statutory Fixed Recovery Compensation:  £70.00
   (Statutory tier for commercial debts under Section 5A of the Act)
---------------------------------------------------------------------------------
TOTAL AMOUNT LEGALLY PAYABLE:             £3,626.10
---------------------------------------------------------------------------------

Please arrange for the full sum of £3,626.10 to be transferred into our settlement account within seven (7) business days, by no later than 25 October 2026.

Failure to settle this statutory debt by 25 October 2026 will result in ongoing daily interest accrual at £1.25 per calendar day and immediate escalation to formal recovery procedures without further notice.

Yours sincerely,

[Your Business Name]
Billing & Accounts Receivable

UK Late Payment Legislation: Your Legal Rights as a Supplier

Under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended in 2002 and 2013 by European Directive 2011/7/EU), small and medium businesses in the United Kingdom have a statutory legal right to claim interest and debt recovery costs on all overdue commercial transactions (B2B).

Statutory Compensation Tiers (Section 5A)

In addition to interest, UK law allows you to charge a mandatory fixed sum to cover your internal administrative costs of pursuing overdue debts:

Size of Overdue Debt	Fixed Statutory Compensation	Legal Reference
Under £1,000.00	£40.00	Section 5A(2)(a)
£1,000.00 to £9,999.99	£70.00	Section 5A(2)(b)
£10,000.00 and above	£100.00	Section 5A(2)(c)

The Bank of England Statutory Interest Formula

Statutory interest is calculated at a flat 8.00% plus the Bank of England reference rate. By law, the reference rate is fixed twice per calendar year:

For debts falling due between 1 January and 30 June: The Bank of England base rate on 31 December is used.
For debts falling due between 1 July and 31 December: The Bank of England base rate on 30 June is used.

Daily Statutory Interest = (Debt × (Bank of England Base Rate + 8%) × Days Overdue) / 365

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