UK Interest Calculator: Judgments Act 1838 and Late Payment of Commercial Debts Act 1998
The UK has two primary statutory interest regimes for civil claims: the Judgments Act 1838 for judgment debts, and the Late Payment of Commercial Debts (Interest) Act 1998 for unpaid commercial invoices.
Judgments Act 1838: The 8% Rate
The Judgments Act 1838 provides for interest on judgment debts at a rate set by statutory instrument. Since 1993, that rate has been 8% per annum. It has not changed in over 30 years.
When it applies: The Judgments Act rate applies to judgment debts in the High Court and County Court. Once a money judgment is entered, interest accrues automatically at 8% from the date of judgment until payment.
Calculation method: Simple interest, calculated daily:
Interest = Principal × 8% × (Days ÷ 365)
Example: £50,000 judgment debt for 2 years
£50,000 × 8% × (730 ÷ 365) = £8,000 interest
Late Payment of Commercial Debts Act 1998
The Late Payment Act allows businesses to claim statutory interest on unpaid commercial debts. The rate is the Bank of England base rate plus 8 percentage points, fixed semi-annually.
Reference rate periods:
- BoE base rate on 31 December → reference rate for 1 January – 30 June
- BoE base rate on 30 June → reference rate for 1 July – 31 December
At present (January 2026), with BoE base rate at 3.75%, the statutory rate is 11.75%.
Additional Entitlements
- Fixed compensation: £40 (debts up to £999.99); £70 (£1,000–£9,999.99); £100 (£10,000+)
- Reasonable recovery costs if the fixed sum is insufficient
Example: £25,000 invoice, 6 months overdue
At 12.75%: £25,000 × 12.75% × (180 ÷ 365) = £1,572.60 interest
Plus £100 fixed compensation = £1,672.60 total
Which Rate Applies?
| Situation | Rate |
|---|---|
| Judgment debt (post-judgment) | Judgments Act 1838 (8%) |
| Unpaid commercial invoice (B2B) | Late Payment Act 1998 (BoE + 8%) |
| Contract specifies interest | Contractual rate (if enforceable) |
| Consumer debt | Late Payment Act does not apply |
Pre-Judgment vs Post-Judgment
Pre-judgment interest is claimed in proceedings before judgment. The court has discretion to award interest at whatever rate it considers appropriate.
Post-judgment interest accrues automatically once judgment is entered, at the Judgments Act rate of 8%.