The Bank of England have cut interest rates from 5% to 4.75%.

What does this mean for you as a freelancer?

It may affect a few things.

SAVINGS/EMERGENCY FUNDS

If you have any money in a business savings account, or you are running an emergency fund - you may make less interest on that now, as most accounts are tied to the BoE base rate. It might be worth shopping around business savings accounts to check you’re getting a good rate.

LATE PAYMENT INTEREST

If you’ve got terms which define your late payment rates as a specific figure, rather than based upon the BoE rate, you might want to update them to reflect the new statutory rates.

Late payment interest is 8% plus the Bank of England base rate (so that’s come down to 12.75%).

I find it’s simplest to just define it as “8% plus Bank of England base rate” in contracts, so you don’t need to change this every time. If you have an outstanding invoice, don’t worry about changing the rate - it’s based upon when you amount became overdue.

It’ll also reduce the amount of interest you’ll be charged on any late payments you make to HMRC.