Daily rate of interest
Also called: Accruing interest, per diem interest
The amount of interest that accumulates on a judgment debt or unpaid invoice each calendar day, calculated from the annual statutory rate.
Definition
The daily rate of interest converts an annual interest rate into a per-day amount. In English civil proceedings, two rates matter most: (1) judgment debt interest — once a judgment is entered, statutory interest accrues on the outstanding amount at 8% per year under the Judgments Act 1838, s.17, giving a daily rate of (debt × 0.08) ÷ 365; (2) late-payment interest on commercial debts — under the Late Payment of Commercial Debts (Interest) Act 1998, interest accrues at 8% above the Bank of England base rate (so in October 2026, with base rate at 4.5%, the rate is 12.5%), giving a daily rate of (debt × 0.125) ÷ 365. When calculating the total interest owed on a claim or judgment, you multiply the daily rate by the number of days from the trigger date (date of judgment, or the contractual payment date) to the date of payment or the date of the interest calculation. County court claim forms require you to state both the principal sum and the interest accrued to the date of issue, plus the daily rate so the court and the defendant can see how the figure changes day by day.
In practice
Use the <a href="/tools" class="body-link">LawTheGuide interest calculator</a> to compute the exact amount of late-payment interest or judgment interest owed. When drafting a county court claim or letter before action, always include: the principal sum, the start date for interest, the applicable rate, the total interest accrued to the date of the letter, and the daily rate so the defendant can check the running total. For late-payment claims, also add the fixed compensation charge (£40, £70, or £100 depending on the debt size) under the 1998 Act. See the <a href="/glossary/statutory-interest" class="body-link">statutory interest glossary entry</a> and the <a href="/guides/business/recovering-unpaid-commercial-invoice" class="body-link">recovering unpaid commercial invoice guide</a>.