The base rate defaults to the current Bank of England rate — it's fixed at whatever it was on the day payment became overdue, so if the invoice is old, check the rate that applied then rather than today's.
This applies to business-to-business invoices in the UK where no different payment terms were agreed in a contract — if your contract specifies its own late payment terms, those usually take precedence. It doesn't apply to consumer clients. You're also entitled to claim reasonable debt recovery costs beyond the fixed compensation if they exceed it, though that isn't calculated here. See gov.uk's late payment guidance for the full rules before invoicing a client for this.
Most freelancers and small businesses don't realise they have a legal right to charge interest on a late invoice — the Late Payment of Commercial Debts (Interest) Act 1998 entitles UK businesses to statutory interest of 8% above the Bank of England base rate on any overdue B2B invoice, calculated daily from the day after the agreed due date, plus a fixed compensation payment on top. This tool works out both figures automatically from your invoice amount and dates, so you know exactly what to add to a follow-up invoice.
The fixed compensation scales with the size of the debt: £40 for debts under £1,000, £70 for £1,000–£9,999.99, and £100 for £10,000 or more — added automatically once a payment is late, regardless of what it actually cost you to chase.
It's your legal right, not an obligation — many freelancers choose not to charge it to preserve a client relationship, especially for a first-time late payment. But it's a genuinely useful lever to mention if a client is chronically late, since it applies automatically in law even if it's not written into your contract.
It applies to business-to-business transactions within the UK, as long as your contract doesn't already specify different late payment terms. It doesn't apply to invoices sent to individual consumers rather than businesses.
UK law allows you to claim reasonable additional debt recovery costs on top of the fixed sum if you can show they were genuinely incurred — this tool only calculates the statutory interest and the automatic fixed compensation, not those additional costs.