Interest

INTEREST

Where a debtor has failed to pay you monies for goods or services supplied, it is normal to charge interest for late payment.  Interest can be charged either in accordance with your terms and conditions of business provided your terms make provision for this or, alternatively, you can apply the Late Payment of Commercial Debts (Interest) Act 1998 which allows you to claim interest on overdue accounts.  If the contract with the debtor predates 7th August 2002, then businesses that are eligible to charge interest can do so at a rate of 8% above the Bank of England base rate that was in place on the day the debt became overdue. For contracts dated on or after 7th August 2002, all businesses can charge interest at a rate of 8% above the late payment reference rate.

The Bank of England base rate on 31 December, is the "reference rate" for debts becoming overdue between 1st January to 30th June each year.
The Bank of England base rate on 30 June, is the "reference rate" for debts becoming overdue between 1st July to 31st December each year.

Should you wish to discuss charging your debtors interest on monies outstanding, then please contact Michael Lee on 020 8201 6299 or e-mail him at michaellee@leepomeranc.co.uk.

This note is intended to be a brief general guide only and should not be used or relied on as a complete or authoritative source of legal information.