Calculate statutory interest owed
Enter the invoice details and the due/payment dates to calculate the statutory interest applicable under the LPCD Act 1998.
The Applicable Legislation
In the UK, statutory interest on late commercial payments is governed by the Late Payment of Commercial Debts (Interest) Act 1998 (LPCD), as amended by the Late Payment of Commercial Debts Regulations 2002 and the 2013 Regulations which implemented EU Directive 2011/7.
LPCD Act 1998 — Key Points
- B2B (business to business): Standard payment term is 30 days unless otherwise contracted. Contractual terms beyond 60 days must be "not grossly unfair".
- B2G (business to public sector): Maximum payment term of 30 days, with stricter rules for the public sector.
- Automatic application: Interest accrues automatically from the day after the due date — no notice, demand or court order required.
- Rate: Bank of England base rate + 8 percentage points, fixed on 31 December and 30 June for each following six-month period.
- Fixed compensation (2002 Regulations): £40 (invoices up to £999.99), £70 (£1,000–£9,999.99) or £100 (£10,000+) per overdue invoice, plus reasonable recovery costs.
Example: Invoice £15,000 | 45 days late | BoE base 5.00%
Statutory rate = 5.00% + 8% = 13.00% p.a.
Interest = 15,000 × 0.13 × (45/365) = £240.41
+ Fixed compensation (≥£10k invoice) = £100.00
The Bank of England base rate is fixed on 31 December (applying to debts owed from 1 January to 30 June) and on 30 June (applying to debts owed from 1 July to 31 December). For 2026, the base rate sits at 5.00%, giving a statutory rate of 13.00% per annum.
How to Recover Statutory Interest
Although interest accrues automatically by law, you'll need to formalise the claim to collect. Follow these 3 steps:
Issue a statement of account
Issue a statement of account or interest invoice referencing the original invoice, the days late, the interest calculated under the LPCD Act 1998, and the fixed compensation (£40-£100). Include payment details and a clear deadline.
Letter Before Action
Send a formal Letter Before Action (LBA) by recorded delivery, giving 7-14 days to pay and warning that you'll commence County Court proceedings if not settled. Keep proof of postage and a copy of the letter.
Money Claim Online (MCOL)
If the debt remains unpaid, file a claim via Money Claim Online for sums up to £100,000. For smaller claims under £10,000, the small claims track keeps costs and complexity low. Successful claimants can recover court fees.
How to Avoid Paying Late Payment Interest
If your business is the one paying suppliers, these are the best practices to avoid incurring statutory interest charges:
Use confirming (supply chain finance)
Confirming guarantees that suppliers are paid within the agreed term, automatically. Eliminates the risk of late payment due to oversight or temporary liquidity squeeze.
Learn more about confirming →Negotiate realistic payment terms
When agreeing contracts, negotiate payment terms you can comfortably meet, factoring in your receivables cycle (DSO). A DPO higher than DSO creates cash flow pressure.
Calculate DPO →Set up due-date alerts
Many late-payment cases come down to simple oversight. Configure automatic alerts 5 and 2 days before supplier invoice due dates so you're never caught off-guard.
Manage on the Advanta platform →Payment delays by sector in the UK
The average B2B payment term in the UK is 36 days, but actual payment time often runs 14-30 days longer. The sectors with the highest late-payment exposure:
Source: Bank of England, Intrum European Payment Report 2025. Illustrative figures based on sector averages.
Frequently Asked Questions on Late Payment Interest
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Never pay statutory interest again
With Confirming, Advanta makes sure your suppliers are paid within their statutory term — your business reimburses in 60-90 days, with no late-payment exposure.