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Late payment legislation & interest calculator

The late payment of commercial debts

In November 1998, the UK Government introduced legislation to give businesses a statutory right to claim interest from other businesses for the late payment of commercial debt. The UK was one of the first countries in the EU to introduce late payment legislation to help promote a culture of prompt payment. Documentation

On 7 August 2002, the Late Payment of Commercial Debts (Interest) Act 1998 was amended so all business owners and managers could claim reasonable debt recovery costs and can benefit from the simplification of the calculation of Statutory Interest. Additionally small and medium sized enterprises could ask a representative body to challenge grossly unfair contract terms used by their customers which do not provide a substantial remedy for late payment of commercial debts. Documentation

On 16 March 2013 further amendments were made to the existing legislation requiring private businesses to pay withing 60 days and public within 30 days. Additional fees could also be charged for recovery and plus other changes. Click here for the documentation relating to the changes

The compensation table below remains the same. After 16 March 2013 additional fees can be claimed if the costs of recovery are not met by the compensation. This does not apply to contracts concluded before 16 march 2013

The compensation entitlement varies in accordance with the size of the debt:
Size of unpaid debtSum to be paid to the creditor
Up to £999.99£40.00
£1,000.00 to £9,999.99£70.00
£10,000.00 or more£100.00

 

The six month period
The Bank of England base rate on 31st December will be the reference rate for: 1st January to 30th June
The Bank of England base rate on 30th June will be the reference rate for: 1st July to 31st December

 

Use this table to look up previous 6 monthly reference periods
Period Reference Rate Interest Rate (Reference rate plus 8%)
1st January - 30th June 2014 0.5% 8.5%
1st July - 31st December 2013 0.5% 8.5%
1st January - 30th June 2013 0.5% 8.5%
1st July - 31st December 2012 0.5% 8.5%
1st January - 30th June 2012 0.5% 8.5%
1st July - 31st December 2011 0.5% 8.5%
1st January - 30th June 2011 0.5% 8.5%
1st July - 31st December 2010 0.5% 8.5%
1st January - 30th June 2010 0.5% 8.5%
1st July - 31st December 2009 0.5% 8.5%
1st January - 30th June 2009 2% 10%
1st July - 31st December 2008 5% 13%
1st January - 30th June 2008 5.5% 13.5%
1st July - 31st December 2007 5.5% 13.5%
1st January - 30th June 2007 5% 13%
1st July - 31st December 2006 4.50% 12.50%
1st January - 30th June 2006 4.50% 12.50%
1st July - 31st December 2005 4.75% 12.75%
1st January - 30th June 2005 4.75% 12.75%
1st July - 31st December 2004 4.50% 12.50%
1st January - 30th June 2004 3.75% 11.75%
1st July - 31st December 2003 3.75% 11.75%
1st January - 30th June 2003 4% 12%
7th August - 31st December 2002 4% 12%
 
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