What statutory interest means
GOV.UK describes statutory interest for qualifying business-to-business late payments as 8% plus the relevant Bank of England base rate.
It is intended for late commercial payments, not every kind of debt. The underlying transaction, payment terms and any contractual interest provision all matter.
How the daily interest is calculated
The basic calculation starts with the unpaid debt multiplied by the annual statutory rate. The yearly interest is then divided by 365 to produce a daily amount, which is multiplied by the number of days the debt has been overdue.
For example, if the applicable annual rate were 11.75%, a £1,000 qualifying debt would produce £117.50 of annual interest, or roughly £0.32 per day before rounding. The applicable rate can change, so do not treat that example rate as permanent.
Which Bank of England rate applies?
The statutory rate is not simply a fixed 8%. It combines the statutory 8 percentage points with the relevant Bank of England rate used for the period in question.
Because rates change over time, the date the payment became late matters. LatePay Kit uses the due date you enter to select the rate implemented by the calculator for that period.
When statutory interest may not apply
GOV.UK states that statutory interest cannot be claimed where the contract already provides a different rate of interest. A genuine dispute or a transaction outside the commercial late-payment regime can also change the position.
If you are unsure whether the invoice is already late, start with our guide to when an invoice is considered late in the UK.
Statutory interest is separate from recovery compensation
Statutory interest increases with the amount owed, the applicable annual rate and the number of days overdue. Fixed recovery compensation is a separate potential amount based on the value of the commercial debt.
Read our £40, £70 and £100 late-payment compensation guide for the current debt bands.
Do you have to charge statutory interest?
GOV.UK says businesses can charge statutory interest on qualifying late commercial payments. You can choose whether to pursue it; the existence of the statutory regime does not force you to add interest to every late invoice.
If you do decide to add interest, GOV.UK advises sending a new invoice for the interest amount. Our how to charge late-payment interest guide covers the practical steps in more detail.
Statutory commercial interest is not the same as every 8% interest rule
Different legal contexts can use different interest rules. The LatePay Kit calculator is focused on potentially eligible UK commercial late payments, so it should not be treated as a general-purpose court-interest or consumer-debt calculator.
Official UK guidance
Calculate the potential interest on your invoice
Use the free LatePay Kit calculator to check the basic eligibility questions and estimate potential statutory interest and fixed recovery compensation for an overdue commercial invoice.
Calculate potential late-payment interest