You can add statutory interest to a qualifying late business payment by calculating the daily interest from the day after the due date and issuing a separate demand or interest invoice. In 2026, the statutory annual rate is 8% plus the Bank of England base rate unless the contract sets a different rate.
This is general information, not legal advice. Check that the debt qualifies and confirm the current base rate and contract before charging.
How to add late payment interest to a UK invoice
- Confirm the customer is a business or public authority and the debt qualifies.
- Check whether the contract sets another interest rate.
- Confirm the original due date and outstanding principal.
- Find the statutory rate for the relevant six-month period.
- Calculate the daily rate and days overdue.
- Add eligible fixed recovery compensation separately.
- Send a calculation tied to the original invoice.
Government guidance explains the current late commercial payment rules.
Statutory interest formula
Use:
Debt × annual interest rate ÷ 365 × days overdue
Illustrative 2026 example only:
- unpaid invoice: £2,000
- assumed annual rate for the example: 13%
- daily interest: £2,000 × 0.13 ÷ 365 = £0.7123
- 30 days overdue: £21.37
Use the actual Bank of England base rate and applicable six-month period. Do not copy 13% unless it is correct for the debt being calculated.
Which date starts the calculation?
Interest starts after the agreed payment date. If no date was agreed, the statutory payment deadline may apply, normally 30 days after the later of receiving the invoice or receiving the goods or service for qualifying business transactions.
The UK invoice payment terms guide explains due-date wording and the statutory fallback.
Fixed recovery compensation
Government guidance in 2026 provides fixed compensation bands based on the debt amount:
| Debt | Fixed sum |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Reasonable recovery costs above the fixed sum may also be claimable in some cases. Keep evidence and take advice before adding unusual costs.
Late payment interest invoice template
Supplier: [Legal business name and address]
Customer: [Legal business name and address]
Interest invoice number: [Unique number]
Date: [Date in 2026]
Original invoice: [Number, date and principal]
Original due date: [Date]
| Calculation | Amount |
|---|---|
| Principal outstanding | £[ ] |
| Annual rate | [ ]% |
| Daily interest | £[ ] |
| Days overdue to [date] | [ ] |
| Interest accrued | £[ ] |
| Fixed recovery sum | £[ ] |
| Total due | £[ ] |
State whether interest continues to accrue after the calculation date.
Contractual interest versus statutory interest
If the contract provides another substantial remedy for late payment, statutory interest may not apply in the same way. Read the clause rather than charging both automatically.
Check:
- agreed rate
- compounding or simple-interest basis
- start date
- notice requirements
- recovery charges
- customer type
When not to add it automatically
Do not add statutory interest without review where:
- the customer is a consumer
- the amount is genuinely disputed
- the payment term or due date is unclear
- the contract sets another remedy
- the original invoice has credits or CIS adjustments outstanding
- insolvency or formal proceedings affect recovery
A reminder policy can flag the account for manual review instead.
Send the notice
Subject: Late payment interest for invoice [number]
Hi [name],
Invoice [number] for £[principal] was due on [date] and remains unpaid. Attached is the interest calculation to [calculation date], including [fixed recovery sum if applicable].
Please pay £[total] by [date] or send any specific query immediately.
Regards,
[your name]
Keep the original invoice, reminders, payment terms and calculation together.
Record a part payment
Interest is calculated on the outstanding principal over time. If a part payment arrives, split the calculation:
- full principal until the part-payment date
- reduced principal after that date
Do not keep charging interest on money already received.
Sendinvo workflow
Sendinvo can draft a separate late payment interest invoice from an overdue sterling business invoice. It uses the original due date and current balance; you review the calculation before sending.
Reminders remain separate. The overdue reminder templates cover the messages sent before escalation.
Final check for 2026
- Is this a qualifying commercial debt?
- Is the principal correct after payments and credits?
- Is the due date evidenced?
- Does the contract replace the statutory rate?
- Is the current base rate correct for the period?
- Are days overdue counted correctly?
- Is compensation in the correct band?
- Is the calculation separate and traceable?
Use the forthcoming Sendinvo late-payment calculator to check the arithmetic, then review the legal basis before sending any charge.