UK Base Rate History and Invoice Finance Discount Charge Statistics 2026
Invoice finance discount charges are priced as the Bank of England base rate plus a lender margin, so the 2021 to 2023 hiking cycle pushed facility costs up sharply before rate cuts began easing them. Base rate sits at 4.50% as of 18 March 2026, 0.75 percentage points below its August 2023 peak of 5.25%.
Key statistics
Current Bank of England base rate, effective 18 March 2026. Source: Bank of England
Peak base rate of the 2021 to 2024 tightening cycle, reached August 2023, the highest level since April 2008. Source: Bank of England
Base rate low point, set by the Monetary Policy Committee in March 2020 as an emergency pandemic measure. Source: Bank of England
Cumulative rate cut from the August 2023 cycle peak (5.25%) to the current 4.50%. Source: Bank of England
Number of back-to-back Bank Rate increases between December 2021 and August 2023. Source: Bank of England
Month Bank Rate first rose from its pandemic low, moving from 0.10% to 0.25%, the first increase in over three years. Source: Bank of England
Month Bank Rate reached its cycle peak of 5.25% after the final rise of the tightening cycle. Source: Bank of England
Month of the first Bank Rate cut of the cycle, from 5.25% to 5.00%, ending over four years without a reduction. Source: Bank of England
Second cut of the easing cycle, Bank Rate reduced from 5.00% to 4.75%. Source: Bank of England
Third cut of the easing cycle, Bank Rate reduced from 4.75% to 4.50%. Source: Bank of England
Typical lender margin added to base rate to set an invoice finance discount charge. Source: UK Finance
Implied invoice finance discount rate range at the current 4.50% base rate, before facility and service fees. Source: UK Finance
Statutory interest rate for late payment of commercial debts (base rate plus 8%) under the Late Payment of Commercial Debts (Interest) Act 1998. Source: legislation.gov.uk
Approximate funds in use across UK Finance member invoice finance and asset-based lending facilities. Source: UK Finance
| Metric | Value | Source |
|---|---|---|
| Current Bank of England base rate, effective 18 March 2026 | 4.50% | Bank of England |
| Peak base rate of the 2021 to 2024 tightening cycle, reached August 2023, the highest level since April 2008 | 5.25% | Bank of England |
| Base rate low point, set by the Monetary Policy Committee in March 2020 as an emergency pandemic measure | 0.10% | Bank of England |
| Cumulative rate cut from the August 2023 cycle peak (5.25%) to the current 4.50% | 0.75 percentage points | Bank of England |
| Number of back-to-back Bank Rate increases between December 2021 and August 2023 | 14 consecutive rises | Bank of England |
| Month Bank Rate first rose from its pandemic low, moving from 0.10% to 0.25%, the first increase in over three years | Dec 2021 | Bank of England |
| Month Bank Rate reached its cycle peak of 5.25% after the final rise of the tightening cycle | Aug 2023 | Bank of England |
| Month of the first Bank Rate cut of the cycle, from 5.25% to 5.00%, ending over four years without a reduction | Aug 2024 | Bank of England |
| Second cut of the easing cycle, Bank Rate reduced from 5.00% to 4.75% | Nov 2024 | Bank of England |
| Third cut of the easing cycle, Bank Rate reduced from 4.75% to 4.50% | Feb 2025 | Bank of England |
| Typical lender margin added to base rate to set an invoice finance discount charge | 1.5% to 3.0% | UK Finance |
| Implied invoice finance discount rate range at the current 4.50% base rate, before facility and service fees | approx 6.0% to 7.5% | UK Finance |
| Statutory interest rate for late payment of commercial debts (base rate plus 8%) under the Late Payment of Commercial Debts (Interest) Act 1998 | 12.50% | legislation.gov.uk |
| Approximate funds in use across UK Finance member invoice finance and asset-based lending facilities | over £20bn | UK Finance |
Source: Bank of England, UK Finance, legislation.gov.uk
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### UK Base Rate History and Invoice Finance Discount Charge Statistics 2026: key figures | Metric | Value | Source | | --- | --- | --- | | Current Bank of England base rate, effective 18 March 2026 | 4.50% | Bank of England | | Peak base rate of the 2021 to 2024 tightening cycle, reached August 2023, the highest level since April 2008 | 5.25% | Bank of England | | Base rate low point, set by the Monetary Policy Committee in March 2020 as an emergency pandemic measure | 0.10% | Bank of England | | Cumulative rate cut from the August 2023 cycle peak (5.25%) to the current 4.50% | 0.75 percentage points | Bank of England | | Number of back-to-back Bank Rate increases between December 2021 and August 2023 | 14 consecutive rises | Bank of England | | Month Bank Rate first rose from its pandemic low, moving from 0.10% to 0.25%, the first increase in over three years | Dec 2021 | Bank of England | | Month Bank Rate reached its cycle peak of 5.25% after the final rise of the tightening cycle | Aug 2023 | Bank of England | | Month of the first Bank Rate cut of the cycle, from 5.25% to 5.00%, ending over four years without a reduction | Aug 2024 | Bank of England | | Second cut of the easing cycle, Bank Rate reduced from 5.00% to 4.75% | Nov 2024 | Bank of England | | Third cut of the easing cycle, Bank Rate reduced from 4.75% to 4.50% | Feb 2025 | Bank of England | | Typical lender margin added to base rate to set an invoice finance discount charge | 1.5% to 3.0% | UK Finance | | Implied invoice finance discount rate range at the current 4.50% base rate, before facility and service fees | approx 6.0% to 7.5% | UK Finance | | Statutory interest rate for late payment of commercial debts (base rate plus 8%) under the Late Payment of Commercial Debts (Interest) Act 1998 | 12.50% | legislation.gov.uk | | Approximate funds in use across UK Finance member invoice finance and asset-based lending facilities | over £20bn | UK Finance | Source: Bank of England, UK Finance, legislation.gov.uk
“The 6.0% to 7.5% implied discount rate range is illustrative, calculated from published base rate and typical margin data, not a quoted price; actual rates vary by lender, sector, facility size and credit risk, and most facilities also carry separate service and arrangement fees not captured in the discount charge alone.”
What the numbers mean
Invoice finance is priced differently to a fixed-rate loan. Most facilities charge a discount fee set as the Bank of England base rate plus a lender margin, typically 1.5 to 3 percentage points depending on sector risk, facility size and whether the arrangement is disclosed or confidential.
When base rate moves, discount charges move with it on the next review date, usually within days rather than months. That variable pricing meant the 14 consecutive rate rises between December 2021 and August 2023, which took base rate from 0.10% to 5.25%, fed straight through into higher borrowing costs for businesses using invoice finance, factoring and discounting facilities, on top of whatever margin their lender applied.
Base rate has since eased in three steps, from 5.25% in August 2024 to 4.50% by February 2025, and has held at 4.50% into March 2026. That takes roughly 0.75 percentage points off the base component of a discount charge compared with the 2023 peak, though the client-facing rate a business is actually quoted depends on its own facility terms, not just the base rate movement. Businesses reviewing an existing invoice finance agreement, or comparing quotes from different providers, should check whether their discount charge is linked to base rate directly and how frequently it resets, since this determines how quickly rate cuts (or future rises) reach their own cost of funding.
FAQs
What is the Bank of England base rate now, and how does it affect invoice finance costs?
Base rate is 4.50% as of 18 March 2026. Most invoice finance discount charges are set as base rate plus a lender margin, so a change in base rate normally feeds through into the discount fee on the facility's next review date.
How is the discount charge on an invoice finance facility calculated?
A discount charge is usually the Bank of England base rate plus a margin set by the lender, commonly in the range of 1.5 to 3 percentage points, applied to the funds advanced against unpaid invoices. This is separate from any service fee charged for credit control and collections.
Why did invoice finance get so much more expensive between 2021 and 2023?
Base rate rose 14 times in a row between December 2021 and August 2023, from 0.10% to 5.25%, the fastest tightening cycle in decades. Because most invoice finance pricing is linked to base rate, discount charges rose in step with each Monetary Policy Committee decision.
What is the statutory interest rate for late payment of commercial debts in the UK?
Under the Late Payment of Commercial Debts (Interest) Act 1998, the statutory rate is base rate plus 8%, which currently works out at 12.50%. This applies where a contract does not specify its own late payment interest rate.
Is invoice finance getting cheaper as the base rate falls?
The base rate component of a discount charge has fallen by 0.75 percentage points from the August 2023 peak of 5.25% to the current 4.50%, which should reduce the cost of variable-rate facilities on their next review date. The overall rate a business pays also depends on its lender's margin and fees, which are not directly tied to base rate.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
Last reviewed: 21 July 2026