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
| Size of unpaid debt | Sum 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 |
| Period | Reference Rate | Interest Rate (Reference rate plus 8%) |
| 1st January - 30th June 2024 | 5.25% | 13.25% |
| 1st July - 31st December 2023 | 5.00% | 13.00% |
| 1st January - 30th June 2023 | 3.50% | 11.50% |
| 1st July - 31st December 2022 | 1.25% | 9.25% |
| 1st January - 30th June 2022 | 0.25% | 8.25% |
| 1st July - 31st December 2021 | 0.10% | 8.10% |
| 1st January - 30th June 2021 | 0.10% | 8.10% |
| 1st July - 31st December 2020 | 0.10% | 8.10% |
| 1st January - 30th June 2020 | 0.75% | 8.75% |
| 1st July - 31st December 2019 | 0.75% | 8.75% |
| 1st January - 30th June 2019 | 0.75% | 8.75% |
| 1st July - 31st December 2018 | 0.50% | 8.50% |
| 1st January - 30th June 2018 | 0.50% | 8.50% |
| 1st July - 31st December 2017 | 0.25% | 8.25% |
| 1st January - 30th June 2017 | 0.25% | 8.25% |
| 1st July - 31st December 2016 | 0.50% | 8.50% |
| 1st January - 30th June 2016 | 0.50% | 8.50% |
| 1st July - 31st December 2015 | 0.50% | 8.50% |
| 1st January - 30th June 2015 | 0.50% | 8.50% |
| 1st July - 31st December 2014 | 0.50% | 8.50% |
| 1st January - 30th June 2014 | 0.50% | 8.50% |
| 1st July - 31st December 2013 | 0.50% | 8.50% |
| 1st January - 30th June 2013 | 0.50% | 8.50% |
| 1st July - 31st December 2012 | 0.50% | 8.50% |
| 1st January - 30th June 2012 | 0.50% | 8.50% |
| 1st July - 31st December 2011 | 0.50% | 8.50% |
| 1st January - 30th June 2011 | 0.50% | 8.50% |
| 1st July - 31st December 2010 | 0.50% | 8.50% |
| 1st January - 30th June 2010 | 0.50% | 8.50% |
| 1st July - 31st December 2009 | 0.50% | 8.50% |
| 1st January - 30th June 2009 | 2.00% | 10.00% |
| 1st July - 31st December 2008 | 5.00% | 13.00% |
| 1st January - 30th June 2008 | 5.50% | 13.50% |
| 1st July - 31st December 2007 | 5.50% | 13.50% |
| 1st January - 30th June 2007 | 5.00% | 13.00% |
| 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 | 4.00% | 12.00% |
| 7th August - 31st December 2002 | 4.00% | 12.00% |