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Interest on money claims

You may be able to claim interest on the money you’re owed.

The amount of interest you can claim is based on how long you’ve been owed money. Interest can continue to build up until your claim is paid, settled or decided by the court.

If you want to claim interest, you must include it in your claim.

If you’re claiming interest

The person or business you’re claiming money from (the ‘defendant’) can agree to pay the interest:

  • when they pay the claim
  • as part of a settlement agreement (for example, through mediation)

If you and the defendant cannot agree, the court will decide whether interest should be awarded. The court’s decision depends on things like:

  • the type of claim
  • any contract between you and the defendant
  • the length of time you’ve been owed money

Check if you need to work out the interest

If you’re making a claim online, interest will be calculated for you.

You’ll usually need to work out the interest yourself if you’re making a claim by post.

If you do not know the claim amount

You must make a claim by post if you do not know the exact amount - you cannot make a claim online.

You’ll need to estimate the amount you’re claiming or leave the ‘amount claimed’ blank.

The court will decide how much you’re owed and any interest that applies to your claim.

If you’re claiming different interest rates

The online service can only calculate interest at one rate.

If you’re claiming different interest rates for different periods, you’ll need to work out the interest yourself and make your claim by post.

If you need to calculate the interest

The rate is usually 8%.

If you’re a business making a claim against another business, there’s a different way to charge interest on a late commercial payment.

To calculate the rate:

  1. Work out the yearly interest: take the amount you’re claiming and multiply it by 0.08 (which is 8%).

  2. Work out the daily interest: divide your yearly interest from step 1 by 365 (the number of days in a year).

  3. Work out the total amount of interest: multiply the daily interest from step 2 by the number of days the debt has been overdue.

Example

If you were owed £1,000:

  • the annual interest would be £80 (1000 x 0.08 = 80)
  • you’d divide £80 by 365 to get the daily interest: about 22p a day (80 / 365 = 0.22)
  • after 50 days this would be £11 (50 x 0.22 = 11)
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