FAQ
About statutory interest.
Simplified summary of the Late Payment of Commercial Debts (Interest) Act 1998.
How is statutory late payment interest calculated?
Multiply the debt by the annual rate (8% plus the Bank of England reference rate), divide by 365 to get the daily interest, then multiply by the number of days the payment is late. Interest is simple, not compound.
Which Bank of England rate should I use?
The reference rate is the Bank of England base rate in force on 30 June (for debts that became overdue between 1 July and 31 December) or on 31 December (for debts that became overdue between 1 January and 30 June). It stays fixed for that six-month period.
How much fixed compensation can I claim?
£40 for debts under £1,000, £70 for debts of £1,000 to £9,999.99, and £100 for debts of £10,000 or more, per invoice.
Does this apply to overseas customers?
The Act applies to contracts governed by the law of a part of the UK. For other contracts, the governing law and the contract decide what interest can be claimed.
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