The Better Payment Practice Group (BPPG) has advised that from 1 July 2003, the new interest rate for companies wishing to apply the late payment legislation is 11.75%. This new rate will apply to payments that become overdue between 1 July 2003 and 31 December 2003.
The late payment legislation provides businesses with a statutory right to claim interest and compensation on overdue commercial debts.
The late payment interest rate is set twice a year and is calculated by adding 8% to the reference rate, which is the Bank of England (BoE) base rate on 30 June and 31 December. This interest rate is applicable for the ensuing six-month periods, i.e. 1 July to 31 December and 1 January to 30 June respectively.
