Late Payment of Commercial Debts (Interest) Act 1998

We calculate interest charges on business-to-business debts referred to us for collection.

 

9.25% pa

The Late Payment of Commercial Debts (Interest) Act 1998 introduced the statutory right to charge interest on late paid invoices etc.

The statutory rate of interest is currently 9.25% pa. The charge applies from the date each invoice (or debt) becomes overdue until the invoice (or debt) is paid in full.

The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 Regulations (SI2002/1675) subsequently amended the Late Payment of Commercial Debts (Interest) Act 1998 by adding:

The rate of interest for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998 shall be 8 per cent per annum over the official dealing rate in force on the 30th June (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June) immediately before the day on which statutory interest starts to run.

The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 Regulations (SI2002/1675)

The ‘official dealing rate’ is defined as:

…the rate announced from time to time by the Monetary Policy Committee of the Bank of England (“the Bank”) and for the time being in force as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets.


 

The current (and previous) decisions of the Monetary Policy Committee of the Bank of England (i.e. the Bank of England interest rate) are available here.  You can view a table of the different interest rates charged to debtors below.

Interest accrues until the invoice(s) is paid IN FULL.


 

Interest Rates

The Late Payment of Commercial Debts (Interest) Act 1998, as amended by The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 Regulations (SI2002/1675) allows interest to be charged on the late payment of invoices. The rate chargeable is based on the Bank of England base rate as at 31 December and 30 June.

PeriodReference Rate
per annum
Interest Rate
per annum
(reference rate plus 8%)
1st July – 31st December 2022     current rate1.25%9.25%
1st January – 30th June 20220.25%8.25%
1st July – 31st December 20210.10%8.10%
1st January – 30th June 20210.10%8.10%
1st July – 31st December 20200.10%8.10%
1st January – 30th June 20200.75%8.75%
1st July – 31st December 20190.75%8.75%
1st January – 30th June 20190.75%8.75%
1st July – 31st December 20180.50%8.50%
1st January – 30th June 20180.50%8.50%
1st July – 31st December 20170.25%8.25%
1st January – 30th June 20170.25%8.25%
1st July – 31st December 20160.50%8.50%
1st January – 30th June 20160.50%8.50%
1st July – 31st December 20150.50%8.50%
1st January – 30th June 20150.50%8.50%
1st July – 31st December 20140.50%8.50%
1st January – 30th June 20140.50%8.50%
1st July – 31st December 20130.50%8.50%
1st January – 30th June 20130.50%8.50%
1st July – 31st December 20120.50%8.50%
1st January – 30th June 20120.50%8.50%
1st July – 31st December 20110.50%8.50%
1st January – 30th June 20110.50%8.50%
1st July – 31st December 20100.50%8.50%
1st January – 30th June 20100.50%8.50%
1st July – 31st December 20090.50%8.50%
1st January – 30th June 20092.00%10.00%
1st July – 31st December 20085.00%13.00%
1st January – 30th June 20085.50%13.50%
1st July – 31st December 20075.50%13.50%
1st January – 30th June 20075.00%13.00%
1st July – 31st December 20064.50%12.50%
1st January – 30th June 20064.50%12.50%
1st July – 31st December 20054.75%12.75%
1st January – 30th June 20054.75%12.75%
1st July – 31st December 20044.50%12.50%
1st January – 30th June 20043.75%11.75%
1st July – 31st December 20033.75%11.75%
1st January – 30th June 20034.00%12.00%
7th August – 31st December 20024.00%12.00%
Statutory Interest Rates

The “period” above relates to the date the invoice / payment became overdue (not the date of the invoice)