A Late Payment Interest Calculator is an Online Tool that helps you Figure Out How Much Extra Money You Owe if a Bill or Tax Payment is made After the Due Date. It uses Formulas to calculate the Interest based on the Original Amount, the Interest Rate, and the Number of Days the Payment is Late.
Formula:
\(\text{Interest} = \text{Principal} \times \text{Rate} \times \left(\frac{\text{Days Late}}{365}\right)\)where P = principal amount (invoice), r = annual interest rate, d = number of days late.
Example: $1,500 invoice 10 days late at 6.625% → 1,500 × (.06625÷360) × 10 = ~$2.75.
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Statutory Late Payment Interest in the UK
In the UK, for Business-to-Business Late Payments, the Late Payment of Commercial Debts (Interest) Act 1998 sets Key Rules. The Statutory Interest Rate is 8% above the Bank of England Base Rate and applies From the Due Date until the Payment is Made.
For Example, if £1,000 is owed and the base rate is 0.5%, the annual interest would be £1,000 × 8.5% = £851, which is about £0.23 per day.
Late Payment Interest Calculator for US Invoices
In the U.S., under the Prompt Payment Act, Federal Agencies must Pay Interest Penalties on Late Invoices. The Interest is Calculated Using the Formula:
\(\text{Interest} = \text{Principal} \times \text{Rate} \times \left(\frac{\text{Days Late}}{360}\right)\)Example: A $1,000 invoice is 15 days late at 4.625% annual interest:
Interest = $1,000 × 0.04625 × (15 ÷ 360) ≈ $1.93
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Interest Calculation Methods and Formulas
For federal invoices under the Prompt Payment Act, interest is calculated using simple daily interest:
\(Interest = P \times \left(\frac{r}{360} \times d\right)\)Where:
- P = principal (invoice amount)
- r = annual interest rate (as a decimal)
- d = number of days late
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FAQs on Late Payment Interest Calculator
What formula is used in a late payment interest calculator?
The formula is Interest = Principal × (Annual Rate ÷ 365) × Days Late to calculate accrued late payment interest.
How many days late before I can charge interest on an invoice?
You can charge interest from the day after the payment due date on a late invoice.
Can I charge statutory interest on a late business-to-business payment in the UK?
Yes, in the UK you can charge statutory interest at 8% plus Bank of England base rate on late B2B payments, plus a fixed debt recovery fee.
What is the current annual interest rate for late payments in the UK?
As of 27 August 2025, the annual statutory late payment interest rate in the UK is 8.00%, calculated as the Bank of England base rate plus 4.00%.
Which online tools help with late payment interest calculation?
Free online tools like LateCalc, StatutoryInterest.co.uk, and PaymentCheck help calculate late payment interest.
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