Statutory compensation per invoice
Up to £999.99p
£1000.00 - £9,999.99p
£10,000 or more
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)