The interest rate for companies wishing to apply the late payment legislation will be 12.5% for the period 1 July to 31 December 2004. For the previous period (1 January to 30 June 2004) the rate was 11.75%.
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 yearly and is calculated by adding 8% to the reference rate, which is the Bank of England base rate on 30 June and 31 December. This interest rate is applicable for the ensuing six-month period, i.e. 1 July to 31 December and 1 January to 30 June respectively.
Statutory interest on an overdue invoice can be determined by using the online calculator at the BPPG's website, www.payontime.co.uk. This website also contains a Guide to the UK's late payment legislation.
Source: BCR
