How do I work out late payment interest to the day?
The short answer
Three numbers. Multiply the invoice by the yearly rate, divide by 3652, then multiply by the days late, counting from the day after the due date8. For an invoice that goes late between 1 July and 31 December 2026 the rate is 11.75%5, fixed by the base rate on 30 June4, so a later move at the Bank of England leaves your sum where it is.
England and Wales only. WolfX is software, not a law firm.
What you can add
A £2,350 invoice, paid 77 days late
Say you invoiced another business £2,350 for joinery, due on 15 July 2026. They paid on 30 September. Interest starts on 16 July: 16 days in July, 31 in August and 30 in September make 77. It went late in the second half of 2026, so the rate is 3.75% base rate plus 8%, which is 11.75%5.
Interest grows by £0.76 a day while an invoice is open. This one stopped on 30 September. If yours is still open, put today's date where the payment date goes.
The road ahead
Five steps. A calculator and half an hour.
Step 1: Find the first late day
Interest usually starts the day after the due date8 you agreed. Due on 15 July means the first late day is 16 July.
If no date was agreed, it is late 30 days after the later of the day they got the invoice and the day you delivered1. An invoice they got on 1 October has its first late day on 31 October.
Step 2: Pick the rate for that half-year
A first late day from 1 July to 31 December takes the base rate in force on 30 June4. One from 1 January to 30 June takes the rate on 31 December. Then add 8%.
For 2026 both halves come to 11.75%, because the base rate was 3.75% on 31 December 2025 and on 30 June 20265. For a first late day in 2025 it was 12.75% up to 30 June and 12.25% after5.
The Act sets the rate at the end of the due date8 and the Order keys it to the day interest starts4, so keep the same rate for every day, even if the Bank moves its rate or the debt runs past 31 December.
Step 3: Work out one day's interest
Interest is simple6, so you do not charge interest on interest. One day is the invoice × the yearly rate ÷ 3652. Keep every decimal until the last step.
At 11.75%5, every £1,000 owed earns 32.19p a day: £2.25 for 7 days, £9.66 for 30, £28.97 for 90. Multiply by your invoice in thousands for a quick check.
Step 4: Count the days and multiply
Count from the day after the due date to the day they paid, both included. That is the payment date minus the due date: 15 July to 30 September is 77 days. Interest stops when the invoice is paid8; if it is still open, use today's date.
Round once, at the end. On GOV.UK's example2 (£1,000 at 8.5% for 50 days), rounding a day to 23p first gives £11.50. Rounding at the end gives £11.64.
Step 5: Add the fixed sum once, then send it
Add £40, £70 or £1003 once, by the size of the invoice. The Act gives it in addition to the statutory interest on the debt9, so interest is worked out on the invoice alone.
Send a new invoice for the extra2 with the letter below. You will usually get one of three answers: payment, a question about your working, or silence. If you hear nothing by your pay-by date, the next step is a letter before action.
A letter you can copy
Letter with the interest working
Send it once the sum is done, whether the invoice has been paid late or is still open.
Tap a highlighted gap to see what goes in it.
Send it by email so it is dated, and keep a copy with the invoice and your working. Attach the new invoice for the interest and fixed sum as a separate document.
When not to bother
When it isn't worth it
- The customer is a consumer, not a business. The Act covers contracts where both sides act in the course of a business7. A sale to a member of the public needs a different route.
- Your contract already names its own late-payment interest. If the remedy is a substantial one10, it replaces statutory interest, so use the contract's rate and terms instead of this sum.
- The invoice is disputed. Work the interest out on the part nobody disputes, ask for that first, and deal with the rest separately.
- It is a day or two late and the client is worth keeping. Two days on £2,350 is £1.51 in interest, and the £70 fixed sum is still yours to ask for. If the client matters more than the money, a friendly reminder usually does more.
The Wolf's note
Whoever pays this is likely to check the sum. Give them one that holds: day one after the due date, one rate throughout, pence rounded once at the end. Then the only thing left to answer is the date.
Mr. Wolf · the AI inside WolfX
What comes next
Your next move
What is late payment compensation, and is it £40, £70 or £100?
All three. If you sold to a business, the law adds a fixed £40, £70 or £100 to each late invoice, by its size, on top of interest, with no costs to prove.
5 min read · Letter included
How do I invoice for the interest and compensation?
Send a new invoice that names the unpaid one, is dated the day you send it and shows its working.
5 min read · Letter included
Can I claim interest on invoices my client already paid late?
Usually. Being paid does not end the right to interest and a fixed sum of £40, £70 or £100 per invoice, and you can claim up to six years back.
6 min read · Letter included
Don't want to do this yourself?
The Wolf does every step for you. He works out the sums, writes the letters and keeps track of every date. Nothing goes without your yes.