SEARCH, INDEX, UPDATES, CONTENTS, INFORMATION, INTEREST ON OVERDUE DEBTS
The Late Payment of Commercial Debts (Interest) Act 1998 came into force on the 1 November 1998, but was implemented in three stages.
From 12th November 1998 a small business having 50 or fewer employees could claim interest from large enterprises having more than 50 employees including the public sector. From 1 November 2000 a small business could claim interest from other small businesses on contracts agreed after that date. From 1 November 2002 large enterprises can also claim interest from small businesses.
Purchasers and suppliers can agree credit terms or terms which are accepted custom and practice in the trade may apply. Where there is no evidence of any agreement the Act defines a default period of 30 days from when the purchaser has notice of the amount of the debt.
The ability to charge statutory interest may affect customer relationships and should be considered when repeat business is important. A business may charge a rate of interest lower than the statutory rate which is 8% over Base Rate.
Base rates changes (updated to September 2006) have been -
| 3/8/2006 | 4.75% |
| 4/8/2005 | 4.50% |
| 5/8/2004 | 4.75% |
| 10/6/2004 | 4.50% |
| 6/5/2004 | 4.25% |
| 5/2/2004 | 4.00% |
| 6/11/2003 | 3.75% |
| 10/7/2003 | 3.50% |
| 6/2/3003 | 3.75% |
| 8/11/2001 | 4.00% |
| 4/10/2001 | 4.50% |
| 18/9/2001 | 4.75% |
| 2/8/2001 | 5.00% |
| 10/5/2001 | 5.25% |
| 5/4/2001 | 5.50% |
| 8/2/2001 | 5.75% |
| 10/2/2000 | 6.00% |
| 13/1/2000 | 5.75% |
| 4/11/1999 | 5.50% |
| 8/9/1999 | 5.25% |
| 10/6/1999 | 5.00% |
| 8/4/1999 | 5.25% |
For more information and general advice on debt management see http://www.payontime.co.uk
It is also possible to claim compensation for debt recovery costs alongside
the statutory late payment interest.
The compensation entitlement varies in accordance with the size of the debt -
| Size of the unpaid debt | Sum to be paid to the creditor |
| Up to £999.99 | £40.00 |
| £1,000.00 to £9,999.99 | £70.00 |
| £10,000.00 or more | £100.00 |
For more information on compensation see http://www.payontime.co.uk/faq
For example letters and forms see http://www.payontime.co.uk/letters
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 19 December 2006.