Invoice Calculator
Calculate the total amount due on a UK invoice, including optional discount and VAT. Optionally calculate late payment interest under the Late Payment of Commercial Debts Act 1998.
How Invoice Calculator works
Invoice calculation
Invoice Total = (Subtotal − Discount) + VAT. VAT is calculated on the net amount after any discount. For the standard rate: Net × 1.20. For reduced rate: Net × 1.05.
Late payment interest (UK)
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses can charge statutory interest on overdue B2B invoices. The rate is the Bank of England base rate + 8%. As of early 2025, with a base rate of 4.75%, the statutory rate is 12.75% per annum. Interest accrues daily from the day after the payment due date.
When can you charge late payment interest?
For business-to-business (B2B) contracts, statutory interest applies automatically unless the contract specifies a different rate. For business-to-consumer (B2C) debts, different rules apply. You are not obliged to claim interest — it is a right, not a requirement.
Compensation for debt recovery costs
In addition to interest, the Late Payment Act also allows fixed compensation: £40 for debts under £1,000; £70 for debts of £1,000–£9,999.99; £100 for debts of £10,000 or more. This calculator does not include this compensation.
Frequently asked questions
How do I calculate VAT on an invoice?
Multiply the net (ex-VAT) amount by 1.20 for standard rate. Example: £1,000 net × 1.20 = £1,200 gross. The VAT amount is £200. Apply the discount before calculating VAT.
Can I charge interest on a late invoice?
Yes, for B2B invoices under the Late Payment of Commercial Debts Act 1998. The statutory rate is Bank of England base rate + 8% per year. You can also agree a different rate in your contract, but it must not be "grossly unfair".
What is the payment term for UK invoices?
The default statutory payment term is 30 days for commercial contracts, unless otherwise agreed. For public sector bodies, the maximum is 30 days. For other businesses, up to 60 days can be agreed; longer terms are subject to a test of fairness.
Does VAT apply to discounts?
Yes — VAT is calculated on the net amount after any discount is applied, not on the original subtotal. This is called a "trade discount". Prompt payment discounts (early payment discounts) are handled differently and may require a VAT credit note.
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