Interest rates are set to a standard rate for each six month period. The periods run from the 1st January to the 30th June and from the 1st July to the 31st December for each year. The rate is set as 8% above the Bank of England's base rate, at the start of each period.
The parties can agree a different rate of interest or an alternative remedy for late payment. In the case of interest, this is usually then known as 'Contractual Interest'. However, the Act requires that the agreement must provide for a 'substantial remedy'. Purchasers are not allowed to force suppliers to accept a low or nominal rate of interest, as a way of getting round this Act. Any such clause is likely to be struck out, in which case interest can be claimed at the rate described above.