Guide

Statutory interest rate on late payments: base rate plus 8%

Updated 2026-08-15

Most pages tell you the rate is base plus 8% and stop. The part that decides your number is which base rate: not today's, but the one fixed on the last 30 June or 31 December.

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The rule in one line

The interest you can charge when another business is late paying is statutory interest, and gov.uk states it plainly: "this is 8% plus the Bank of England base rate for business to business transactions" (gov.uk). The same page adds two limits worth knowing before you invoice: you cannot claim statutory interest if a different rate of interest is set in the contract, and you cannot use a lower interest rate in a contract with a public authority.

Which base rate: the six month rule

The rate is not re-set every time the Monetary Policy Committee moves. Article 4 of the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 fixes it at 8% over "the official dealing rate in force on the 30th June (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June) immediately before the day on which statutory interest starts to run" (legislation.gov.uk). The Scottish order uses the same words.

So the rate attaches to the debt on the day interest starts and stays with it. Section 4(2) of the Act says statutory interest runs "at the rate prevailing under section 6 at the end of the relevant day" (legislation.gov.uk). A debt that fell due in March 2026 and one that fell due in September 2026 can carry different rates, and neither changes because base rate moves next month.

The rate for 2026

Statutory rate by the half year in which interest starts to run
Interest starts to run	Base rate used	Reference date	Statutory rate
1 January to 30 June 2026	3.75%	31 December 2025	11.75%
1 July to 31 December 2026	3.75%	30 June 2026	11.75%

The Bank of England reduced Bank Rate to 3.75% on 18 December 2025 and has held it there since, most recently in July 2026, so both 2026 reference dates give the same answer (Bank of England rate history, current Bank Rate). Check the current rate before you invoice: this page states the position on its updated date above and we correct it in place.

What the rate is not

Not compound. The Act gives simple interest on the qualifying debt. Our calculator multiplies the daily amount by the days late; it does not add interest to interest.
Not a penalty you can set yourself. If your contract already fixes an interest rate for late payment, that contractual rate applies and the statutory right is displaced.
Not the same as HMRC late payment interest. This rate is for commercial debts between businesses. Interest HMRC charges on unpaid tax is a separate regime with its own rate.

Interest is only half of what you can claim. The fixed sum for recovering the debt is set by section 5A and is claimable on top.

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Questions, answered directly

What is the statutory interest rate for late payments in 2026?

11.75% a year. It is the Bank of England base rate of 3.75% plus the statutory margin of 8%. Base rate was 3.75% on both 31 December 2025 and 30 June 2026, the two reference dates that fix the rate for 2026, so the rate is the same for debts falling due in either half of the year.

Does the statutory interest rate change when the Bank of England changes base rate?

Not immediately, and not for debts already running. The rate is fixed by the base rate in force on the preceding 30 June or 31 December, and it stays with the debt from the day interest starts. A base rate cut in, say, August does not reduce interest on a debt that started running in July.

Sources

This site's own datasets, every figure quoted from its source and dated:

The median published figure in the Late Payment Prevalence is 50 percent across 2 sources' own pages (range 37 to 63 percent), read 12 October 2026.
The Late Payment Recovery Costs carries 19 published figures read from 3 sources' own pages, from 16 to 10,000 GBP, read 17 October 2026.
The median published figure in the Statutory Late Payment Rate Series is 7.88 percent across 4 sources' own pages (range 3.75 to 8 percent), read 17 October 2026.

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