UK statutory late payment interest: 8% plus Bank Rate

Under the Late Payment of Commercial Debts (Interest) Act 1998, a UK business can charge another business statutory interest on a late payment. GOV.UK puts it as “8% plus the Bank of England base rate for business to business transactions”. You can’t claim statutory interest if your contract sets a different rate.

Which Bank Rate to use

The rate isn’t today’s Bank Rate. Article 4 of the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 sets it at 8% a year over the Bank of England official dealing rate in force on:

• 30 June, for interest that starts to run between 1 July and 31 December;
• 31 December, for interest that starts to run between 1 January and 30 June,

immediately before the day statutory interest starts to run. The Bank of England publishes the history of Bank Rate changes.

Working it out by hand

It is simple interest. GOV.UK’s example: £1,000 owed with a base rate of 0.5% gives annual interest of £85 (1,000 × 0.085), about 23p a day, so £11.50 after 50 days. In practice, for each late invoice you need the half-year reference date, the rate on that date, the days late and the amount owed, then a new invoice for the interest.

If no payment date was agreed, GOV.UK says a payment is late 30 days after the customer gets the invoice or you deliver the goods or service, whichever is later.

What Lateby does

• Picks the rate per invoice. With “UK statutory: Bank Rate + 8%, per invoice”, each invoice gets 8% plus the Bank Rate on the 30 June or 31 December before the day after its due date, from a built-in table of Bank Rate history.
• Shows and lets you edit that table. When an invoice needs a half-year that isn’t in it yet, Lateby stops and names the missing date instead of guessing.
• Writes the rate on every line, for example “at 12.25% a year (UK statutory: Bank Rate 4.25% on 30/06/2025 + 8%)”, on the import file, the PDF notice and the summary.
• Days late run from the day after the due date to the “calculate to” date you choose. A grace period doesn’t change which half-year rate an invoice gets.
• It can add the fixed sums of £40, £70 or £100 as well.

The output is a Xero import file of draft interest invoices plus a PDF notice per customer. See adding interest to late invoices in Xero.

What to check

• Statutory interest applies to business-to-business debts, not consumers.
• Lateby charges on the amount still due in the export for the whole period, because Xero’s export has no payment dates.

Lateby is a calculator, not legal advice. Charge interest only where your terms or the law allow it, and only to business customers: interest on consumer debts is regulated differently.

More guides

• Add interest to late invoices in Xero
• Late payment compensation: £40, £70 or £100 per invoice
• Record late-payment interest in Xero as Interest Income

Lateby is independent and not affiliated with or endorsed by Xero. Xero is a trademark of Xero Limited. This guide was checked against the linked sources on 27 October 2026; Xero changes its product, so check the current Xero Central article if a menu looks different.