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 eased them. Base rate rose to 4% on 5 November 2026, 1.25 percentage points below its August 2023 peak of 5.25%.
Key statistics
Current Bank of England Bank Rate, effective 5 November 2026. Source: Bank of England
Peak Bank Rate of the 2021 to 2023 tightening cycle, reached on 3 August 2023. 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
Net fall from the August 2023 cycle peak (5.25%) to the current 4%. 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% on 16 December 2021. 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% on 1 August 2024, the first cut since March 2020. 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
Bank Rate raised from 3.75% to 4% on 5 November 2026, after cuts took it to 3.75% on 18 December 2025. Source: Bank of England
Statutory interest for late payment of commercial debts where interest starts to run between 1 July and 31 December 2026 (Bank Rate on 30 June 2026, 3.75%, plus 8 percentage points). Source: GOV.UK
Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance). Source: UK Finance
| Metric | Value | Source |
|---|---|---|
| Current Bank of England Bank Rate, effective 5 November 2026. | 4% | Bank of England |
| Peak Bank Rate of the 2021 to 2023 tightening cycle, reached on 3 August 2023. | 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 |
| Net fall from the August 2023 cycle peak (5.25%) to the current 4%. | 1.25 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% on 16 December 2021. | 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% on 1 August 2024, the first cut since March 2020. | 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 |
| Bank Rate raised from 3.75% to 4% on 5 November 2026, after cuts took it to 3.75% on 18 December 2025. | Nov 2026 | Bank of England |
| Statutory interest for late payment of commercial debts where interest starts to run between 1 July and 31 December 2026 (Bank Rate on 30 June 2026, 3.75%, plus 8 percentage points). | 11.75% | GOV.UK |
| Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance). | over £20bn | UK Finance |
Source: Bank of England, GOV.UK, UK Finance
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### UK Base Rate History and Invoice Finance Discount Charge Statistics 2026: key figures | Metric | Value | Source | | --- | --- | --- | | Current Bank of England Bank Rate, effective 5 November 2026. | 4% | Bank of England | | Peak Bank Rate of the 2021 to 2023 tightening cycle, reached on 3 August 2023. | 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 | | Net fall from the August 2023 cycle peak (5.25%) to the current 4%. | 1.25 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% on 16 December 2021. | 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% on 1 August 2024, the first cut since March 2020. | 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 | | Bank Rate raised from 3.75% to 4% on 5 November 2026, after cuts took it to 3.75% on 18 December 2025. | Nov 2026 | Bank of England | | Statutory interest for late payment of commercial debts where interest starts to run between 1 July and 31 December 2026 (Bank Rate on 30 June 2026, 3.75%, plus 8 percentage points). | 11.75% | GOV.UK | | Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance). | over £20bn | UK Finance | Source: Bank of England, GOV.UK, UK Finance
“The Bank of England figures are the published Bank Rate history. What a business pays on an invoice finance facility is set by its lender: margins and fees are not published as a standard range, so this page does not quote an implied discount rate.”
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, which varies with sector risk, facility size and whether the arrangement is disclosed or confidential.
When base rate moves, discount charges usually move with it, on the date set in the facility agreement. 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 several steps, from 5.25% in August 2024 to 4.50% by February 2025, before falling further to 3.75% by 18 December 2025. It then rose to the current 4% on 5 November 2026. That leaves the base component of a discount charge 1.25 percentage points below 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 moves 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%, raised from 3.75% on 5 November 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, which varies by lender, 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%, using the base rate on 30 June or 31 December. For interest starting by 31 December 2026 that is 11.75%. This applies where a contract does not specify its own late payment interest rate.
Is invoice finance getting cheaper?
Not after the latest move. The base rate component of a discount charge is 1.25 percentage points below the August 2023 peak of 5.25%, at the current 4%, but it rose by 0.25 percentage points on 5 November 2026, which should raise 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 was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.
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