What you can claim extra - Statutory late payment compensation and interest

Under The Late Payment of Commercial Debts Interest Act 1998

For Business to Business debts (B2B) you can claim extra amounts in addition to your overdue invoice total. A business to business debt does not, as some think, have to be between Limited companies. It can be between two sole traders, a partnership, or a sole trader owing money to a LTD company or any combination.

It does not apply to consumer (members of the public) debts. So if for example you carried out some gardening work at a persons house and they did not pay the invoice you cannot charge statutory compensation or statutory interest. If however you carried out the gardening work at the persons office you could.

Statutory compensation

This is designed to compensate you for your debt collection costs. Unfortunately the tariff was last updated over 10 years ago so the compensation received is often inadequate. We add statutory compensation and interest to your debt automatically. It is calculated on a per invoice basis, so if you had a £999 debt made up from 1 invoice you would be entitled to one payment of statutory compensation ie £40, if the same debt was made up from 3 overdue invoices you are entitled to 3 x £40 = £120 extra. Statutory compensation is calculated as follows:

Invoice Amount	Statutory compensation per invoice
Up to £999.99p	£40
£1000.00 - £9,999.99p	£70
£10,000 or more	£100

Statutory interest

You are entitled to charge - again we calculate it for you automatically - statutory interest. This is calculated at 8% above the Bank of England base rate. A reference rate every 6 months is used to work out the interest as base rate fluctuates. Use the form below to see how much interest you are entitled to. Again its worked out on a per invoice basis. The date contract formed field is purely to check that the debt was incurred after the act came into force, so you don’t have to put an exact date in for this.

Late payment statutory interest calculator

This calculator is written in JavaScript. If for any reason you have JavaScript turned off, your browser cannot support JavaScript or you are experiencing difficulties in making the calculator work, please look at the following instructions below with regard to manually calculating your interest calculations.

How do I calculate the interest charge?
The interest owed on a late payment is simple, not compound, interest. It is calculated like this: Debt times the interest rate times the number of days late divided by 365
Do I calculate inclusive or exclusive of VAT? You charge interest on the gross amount of the debt (including any element of VAT), but you do not pay VAT on the interest.
An example is provided below.
If the base rate is 4% for the six-month period when the debt became late, then the statutory interest rate is 12% (4% base rate plus 8%) Debt is GBP 851.06
plus GBP 148.94 VAT = total GBP 1,000
If this debt is 30 days late, then the interest owed is:
GBP 1,000 x 12% = GBP 120 (the annual rate)
GBP 120 � 365 = 32.9p (the daily rate)
32.9 pence x 30 days = GBP 9.86 (the interest owed to date)

For information on the Bank of England base rates, please use the following link: http://www.bankofengland.co.uk/Links/setframe.html and click on �Current MPC Interest Rate�. Then click on 'Interest Rate Decisions' which provides access on the right-hand side to all interest rate decisions made since 1997.

CALCULATOR
Date the work was done approx	(dd/mm/yyyy)
Date payment became overdue	(dd/mm/yyyy)
Date of Payment (if principal debt has now been paid):	(dd/mm/yyyy)
Are you a public sector body?	(tick for yes)
Number of approx employees (Creditor)	(numbers only)
Number of approx employees (Debtor)	(numbers only)
Total invoice value (inc VAT)	(numbers only)

CALCULATION RESULTS