This calculator is written in JavaScript. If for any reason you have JavaScript turned off, your browser cannot support JavaScript or you are experiencing difficulties in making the calculator work, please look at the following instructions below with regard to manually calculating your interest calculations.

How do I calculate the interest charge?
The interest owed on a late payment is simple, not compound, interest. It is calculated like this: Debt times the interest rate times the number of days late divided by 365
Do I calculate inclusive or exclusive of VAT? You charge interest on the gross amount of the debt (including any element of VAT), but you do not pay VAT on the interest.
An example is provided below.
If the base rate is 4% for the six-month period when the debt became late, then the statutory interest rate is 12% (4% base rate plus 8%) Debt is £851.06
plus £148.94 VAT = total £1,000
If this debt is 30 days late, then the interest owed is:
£1,000 x 12% = £120 (the annual rate)
£120 ÷ 365 = 32.9p (the daily rate)
32.9 pence x 30 days = £9.86 (the interest owed to date)

For information on the Bank of England base rates, please use the following link: http://www.bankofengland.co.uk/Links/setframe.html and click on ‘Current MPC Interest Rate’. Then click on 'Interest Rate Decisions' which provides access on the right-hand side to all interest rate decisions made since 1997.
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Statutory Interest Calculator

Welcome to the Statutory Interest Calculator. Please follow the instructions below.

Please input the date the contract with your debtor was made, as this will determine your right to charge interest under the late payment legislation. If you do not have a contract with your debtor, please enter the date when the agreement to buy and sell goods or services was made.

Businesses trading without a contract or those trading with contracts that need reviewing may find this link to the Terms of Trade page helpful.

Please input the date when the payment became overdue. If you have agreed a credit period with your debtor, then the date you need to enter here will be the last day of that credit period. Otherwise, the due date is either 30 days after the delivery of the goods or services OR 30 days after the date of invoicing, whichever is later.

If endeavouring to claim interest retrospectively please complete the 'Date Of Payment' field. If your debtor has not yet paid you, disregard this field.

Please check the 'Public Sector Company?' field below if your organisation was a public sector body at the time the payment became overdue.

Then, in the 'Number Of Employees (Creditor)' field, enter the number of employees in your organisation (the creditor) at the time the payment became overdue.

Next, in the 'Debtor Employees' field, enter the number of employees in the debtor organisation at the time the payment became overdue.

Finally, in the 'Invoice Value' field, enter the invoice value, inclusive of VAT and click the 'Calculate' button.
CALCULATOR
Date contract formed  (dd/mm/yyyy)
Date payment became overdue  (dd/mm/yyyy)
Date of Payment (if principal debt has now been paid):  (dd/mm/yyyy)
Are you a public sector body? (tick for yes)
Number of employees (Creditor)  (numbers only)
Number of employees (Debtor)  (numbers only)
Total invoice value (inc VAT)  (numbers only)
 
CALCULATION RESULTS
  Printer friendly version of results

This calculator is written in JavaScript. If for any reason your browser cannot support JavaScript or you are experiencing difficulty in making the calculator work, please look at the following instructions below with regard to manually calculating your interest calculations.

The formula used by the interest calculator is as follows:
Debt times the interest rate times the number of days late divided by 365 

The daily rate is calculated as follows:
Debt times the interest rate divided by 365

Example
If the base rate is 4% for the six-month period when the debt became late, then the statutory interest rate is 12% (4% base rate plus 8%)
Debt is £851.06 plus £148.94 VAT = total £1,000
If this debt is 30 days late, then the interest owed is:
£ 1,000 x 12% = £120 (the annual rate)
£ 120 ÷ 365 = 32.9p (the daily rate)
32.9 pence x 30 days = £9.86 (the interest owed to date)

The interest rate which applies to your debt is identified as follows:
For contracts dated prior to 7th August 2002 the late payment interest rate is 8% plus the Bank of England base rate that was in place on the day the debt became overdue. For information on the Bank of England base rates, please click here and click on ‘Interest Rate Decisions’ which is under ' Current Bank Rate' which provides access on the right-hand side to all interest rate decisions made since 1997.

For contracts dated on or after 7th August 2002 the late payment interest rate is 8% plus the reference rate. The current reference rate for the period 1st July 2009 to 31st December 2009 is 0.5%
For information on historic late payment reference rates, dating back to 7th August 2002, please click here.

How to inform your debtor of the interest and/or compensation due:
View our collection letter for advice on informing your debtor of the interest due: If the debt pertains to a contract dated prior to 7th August 2002 click here If the contract with your debtor was dated on or after 7th August 2002 click here

Further information can be found by reading 'A users guide to late payment legislation' which can be downloaded by clicking here.

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