Invoice Late Fee & Interest Calculator
Invoice late fee calculator: interest and fixed compensation on an overdue invoice under the UK Late Payment Act (8% + base rate), the EU Late Payment Directive, or your own contract rate.
| Days overdue | — |
|---|---|
| Interest rate applied | — |
| Daily interest | — |
| Interest to date | — |
| Fixed compensation / late fee | — |
| Invoice amount | — |
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In short
UK businesses can charge statutory interest of 8% above the Bank of England base rate on overdue B2B invoices plus fixed compensation of £40, £70 or £100 depending on the debt size; the EU minimum is the ECB rate plus 8 points and €40. In the UAE, Saudi Arabia and Pakistan only the rate written in the contract applies. Interest = amount × annual rate ÷ 365 × days late.
Who this is for: Freelancers, agencies and finance teams chasing overdue B2B invoices in the UK, EU, UAE, Saudi Arabia or Pakistan.
What you can legally charge on a late invoice
- United Kingdom (B2B): the Late Payment of Commercial Debts (Interest) Act 1998 gives every business a statutory right to charge 8% above the Bank of England base rate on overdue commercial invoices, plus a fixed compensation of £40 (debt under £1,000), £70 (£1,000–£9,999.99) or £100 (£10,000+) per invoice. The base rate used is the one in force on 30 June or 31 December before the debt became late. Interest runs from the day after the due date (or 30 days after invoice/delivery if no terms were agreed).
- European Union (B2B): Directive 2011/7/EU sets a minimum statutory rate of the ECB main refinancing rate + 8 percentage points and a fixed recovery cost of at least €40. Member states may set higher rates (Germany uses base rate + 9 points).
- UAE, Saudi Arabia and Pakistan: there is no automatic statutory late-payment interest for commercial contracts. You can only charge what the contract says — many contracts specify a monthly percentage or a flat late fee — and in Saudi Arabia interest-style charges may be unenforceable, so a fixed administrative fee is the usual approach. Choose Contract rate and enter your terms.
Formula in every case: interest = amount × annual rate ÷ 365 × days overdue (simple interest, not compounded).
See also: UAE VAT Invoice Generator.
Assumptions
- Simple daily interest: amount × annual rate ÷ 365 × days overdue, counted from the day after the due date.
- UK: rate = base rate + 8%; compensation £40 (< £1,000), £70 (£1,000–£9,999.99), £100 (≥ £10,000).
- EU: rate = ECB rate + 8 points; €40 compensation. Contract mode uses your own rate and fee.
- Default reference rates are the last recorded values and must be confirmed.
Worked example
Rate = 4.00% + 8% = 12% a year → daily interest = 5,000 × 0.12 ÷ 365 = £1.64
Interest for 45 days = £73.97; fixed compensation for a £1,000–£9,999.99 debt = £70
Total now due = 5,000 + 73.97 + 70 = £5,143.97
Frequently asked questions
Do I have to state late-payment interest on the original invoice?
In the UK and EU the statutory right exists whether or not the invoice mentions it, but stating your terms ('Interest will be charged under the Late Payment of Commercial Debts Act') removes any argument and improves payment behaviour.
Can I charge statutory interest to a consumer?
No — the UK Act and the EU Directive cover business-to-business (and business-to-public-authority) debts only. Consumer late fees must be in the contract and be reasonable.
Is the interest compound?
No, it is simple daily interest on the unpaid principal. This calculator does not compound.
Is late-payment interest subject to VAT?
In the UK, statutory interest and the fixed compensation are outside the scope of VAT — invoice them without VAT on a separate document from the goods or services.
How much interest can I charge on a late invoice in the UK?
8% above the Bank of England base rate per year, as simple daily interest, plus £40, £70 or £100 fixed compensation per invoice, for business customers.
Can I charge late fees in the UAE?
Only what the contract provides — there is no statutory late-payment interest for commercial contracts, so put a clear late-fee clause in every quotation and contract.
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