Jurisdiction(s):
United Kingdom

Key definition

Interest definition

What does Interest mean? Interest is the additional sum payable for the time‑value of money: the amount a borrower pays a lender for using money, the return on debt‑type investments, and the sum awarded for being kept out of funds in litigation. Entitlement arises by: - Contract (contractual interest), including default interest, fixed or floating rates (for example, over base rate or SONIA), and simple or compound interest. Clauses must be clearly drafted and not operate as an unlawful penalty or unfair term. - Statute (statutory interest), for example late payment interest on commercial debts under the Late Payment of Commercial Debts (Interest) Act...

SRA-compliant Client Money Interest Policy: payment, calculation, account types, exceptions, contracting out and COFA oversight (England and Wales)

Published by a LexisNexis Practice Compliance expert

Precedents

1 Amount of Interest

We will credit a reasonable amount of interest to Clients or third parties on any client funds we are holding for them.

2 Circumstances in which interest will not be paid

We will not pay interest:

2.1 on funds we are directed to keep outside of a client account in a manner that earns no interest, eg cash held in our safe;
2.2 where the amount of interest, as assessed under this Policy, falls below £[ 30 ] [ —on the basis that the costs financially associated with paying that interest are disproportionate to the amount involved overall ] ;
2.3 where we agree an alternative arrangement, in writing, with the client or third party for whom the money is held—when this occurs, we will provide sufficient appropriate information to enable the client or the third party to give informed consent (see ‘Contracting out’ at section 9 below);
2.4 [ on money held for the Legal Aid Agency; ]
2.5 [ [ insert other ].

...

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Web page updated on 22/05/2026

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