If the claimant turns down a defendant's Part 36 offer and the outcome is penalised, what is the typical interest on costs?

• A. A 1-2% uplift on costs above base rate
• B. 1-2% interest above base rate on costs
• C. No interest
• D. 10% interest above base rate on costs

Answer: (B)

Part 36 offers carry costs consequences. If the claimant rejects the offer and does not obtain a more favorable outcome at trial, the court can impose an interest on costs at a rate of base rate plus a modest uplift. The typical level is base rate plus 1-2%, meaning interest on the taxed costs accrued from the relevant date. This serves as a small penalty for declining a reasonable settlement and to compensate the other side for the delay in payment. It’s not no interest, nor a large 10% rate, and it isn’t a flat uplift to the costs themselves—it's interest on the costs.