Interest on Late Payments

2. The Rate of Interest

2.1 The law gives you the right to charge interest at the Bank of England base rate plus eight per cent.

• For example, if the base rate is four per cent, you could charge interest at 12 per cent.By comparison, a business overdraft is typically charged at two to three per cent over base rate.

2.2 Rates for calculating interest are fixed for six-month periods.

• The base rate on 31 December will be used for debts becoming late between 1 January and 30 June. The rate in force on 30 June will be used from 1 July to 31 December.
• To find out the base rate, call the Bank of England's Public Enquiries Unit (020 7601 4878) or visit www.payontime.co.uk.