I run Landolio, a small UK freelancer admin business. This is an existing Landolio guide republished here because it solves a question I see freelancers ask a lot.
UK Freelancer Late Payment Legal Rights 2026: How to Claim Statutory Interest & Get Paid
Last updated: February 2026
You've done the work. You sent the invoice. The payment is now 45 days overdue. Your client is "just waiting on finance" or "processing it this week" — again.
You're not alone. Late payment costs UK small businesses £23.4 billion per year, and freelancers bear the brunt. But here's what most freelancers don't know: you have powerful legal rights under UK law, including the automatic right to charge interest and compensation on late payments — whether or not it's in your contract.
This guide covers everything you need to know about late payment law in the UK in 2026, including:
- When a payment is legally "late" (it's probably sooner than you think)
- How much statutory interest you can charge (8% + Bank of England base rate)
- Fixed compensation you're entitled to (£40-£100 depending on invoice amount)
- The exact 5-step process to recover unpaid invoices
- Template letters you can send today
Let's get your money back.
When Is a Payment Legally "Late" in the UK?
Under the Late Payment of Commercial Debts (Interest) Act 1998, a payment is legally late:
30 days after whichever is later:
- The date you issued the invoice, OR
- The date you delivered the goods/service
Example: You complete a website on 15 January and invoice the same day. Payment is legally late from 15 February (30 days later).
Your contract can override this — if you agreed "payment within 14 days" in your contract, that becomes the legally enforceable deadline. But if you never agreed payment terms? The law defaults to 30 days maximum.
What If the Client Says "Net 60" or "Net 90"?
If you agreed to extended payment terms (60 or 90 days) in your contract, those terms apply. But here's the thing: you don't have to accept unreasonable payment terms just because the client demands them.
The law considers payment terms "grossly unfair" if they're:
- Significantly longer than industry standard (30 days)
- Designed to benefit the larger party at the expense of the smaller one
If a large company is forcing you into 90-day terms while you're a sole trader, you can challenge this. More on that in the recovery process below.
How Much Statutory Interest Can You Charge?
The Late Payment Act gives you an automatic right to statutory interest on any late B2B payment — whether or not you mentioned it in your contract.
The Statutory Interest Rate (2026)
Formula: 8% + Bank of England Base Rate
As of February 2026:
- Bank of England Base Rate: 4.00%
- Total statutory interest rate: 12.00% per year
(The BoE base rate changes regularly. Check Bank of England official rates for the current rate.)
How to Calculate It
Formula:
(Invoice Amount × 0.12) ÷ 365 × Number of Days Late = Interest Owed
Example:
- Invoice: £3,000
- Days late: 60
- Interest: (£3,000 × 0.12) ÷ 365 × 60 = £59.18
Not massive, but it's your legal right, and it adds up. More importantly: it sends a message that you know your rights and won't be pushed around.
Fixed Compensation for Debt Recovery Costs
On top of interest, you're also entitled to a fixed compensation amount to cover the administrative cost of chasing payment.
| Invoice Amount | Fixed Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 - £9,999.99 | £70 |
| £10,000+ | £100 |
Example: £3,000 invoice that's 60 days late:
- Statutory interest: £59.18
- Fixed compensation: £70
- Total you can claim: £3,129.18
You can claim this in addition to interest, and it's automatic — you don't need to prove your actual costs.
Can You Charge Late Fees in Your Contract?
Yes — and you should.
The statutory interest (12% annually) is your fallback if you didn't specify anything. But you can write your own late fee terms into your contract, such as:
- "Invoices unpaid after 30 days incur a 5% late fee"
- "Interest charged at 2% per month on overdue balances"
Important: Your contractual late fee replaces the statutory interest. You can't claim both. So if your contractual rate is lower than statutory (12% annually), the client can elect to pay statutory instead.
Best practice: Set your late fee slightly higher than statutory to incentivise on-time payment, but keep it reasonable (courts can void "penalty" clauses that are clearly punitive rather than compensatory).
The 5-Step Late Payment Recovery Process
Step 1: Send a Friendly Reminder (Day 30)
Payment is now officially late. Don't assume malice — start polite.
Email template:
Subject: Invoice [#12345] Payment Reminder
Hi [Client Name],
I hope this finds you well. I'm following up on invoice #12345 for £3,000, issued on [date]. According to our agreed payment terms, this was due on [date].
If you've already processed payment, please disregard this message. If not, could you confirm when I can expect to receive it?
Let me know if there's anything I can help with to get this resolved.
Best regards,
[Your Name]
Wait 7 days.
Step 2: Formal Late Payment Notice (Day 37)
Still no payment? Time to get formal.
Email template:
Subject: FORMAL NOTICE: Overdue Invoice #12345 — Statutory Interest Applies
Dear [Client Name],
This is a formal notice regarding overdue invoice #12345 for £3,000, issued on [date] and due on [date].
Payment is now 7 days overdue. Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to charge:
- Statutory interest at 12% per annum (8% + Bank of England base rate)
- Fixed compensation of £70 for debt recovery costs
Unless payment is received within 7 days, I will begin accruing statutory interest and may escalate to formal debt recovery proceedings.
Outstanding balance: £3,000
Interest accrued to date: £17.75
Fixed compensation: £70
Total due: £3,087.75Please arrange immediate payment to avoid further charges.
Regards,
[Your Name]
Wait 7 days.
Step 3: Letter Before Action (Day 44)
This is your final warning before legal action. Send this by email AND recorded delivery post to create a paper trail.
Template:
LETTER BEFORE ACTION
Date: [Date]
Invoice Number: #12345
Amount Outstanding: £3,000
Interest & Compensation: £87.75
Total Due: £3,087.75Dear [Client Name],
I am writing to formally notify you that unless payment of the above amount is received within 14 days of the date of this letter, I will commence legal proceedings to recover the debt without further notice.
This may result in additional court costs and legal fees being added to the claim.
If you are experiencing financial difficulty, please contact me immediately to discuss a payment plan.
Payment due by: [Date + 14 days]
Yours sincerely,
[Your Name]
[Address]
Wait 14 days.
Step 4: Money Claim Online (Day 58)
If they still haven't paid, it's time to file a legal claim.
Money Claim Online (MCOL) is the UK government's online system for recovering debts up to £100,000. It costs:
| Claim Amount | Court Fee |
|---|---|
| Up to £300 | £35 |
| £300.01 - £500 | £50 |
| £500.01 - £1,000 | £70 |
| £1,000.01 - £1,500 | £80 |
| £1,500.01 - £3,000 | £115 |
| £3,000.01 - £5,000 | £205 |
| £5,000.01 - £10,000 | £455 |
| £10,000.01 - £100,000 | 5% of claim |
You can add the court fee to your claim. So if you're claiming £3,087.75, you'd also claim the £115 court fee, making the total £3,202.75.
How MCOL works:
- File your claim online at moneyclaim.gov.uk
- The court issues your claim to the defendant (your client)
- They have 14 days to respond
- If they don't respond, you can request a County Court Judgment (CCJ) by default
- If they dispute it, the case goes to a hearing (rare — most settle before this)
What happens after a CCJ?
A CCJ is a court order saying they owe you money. If they still don't pay, you can:
- Instruct bailiffs to seize assets
- Apply for a charging order on their property
- Get an attachment of earnings order (if they're employed)
CCJs damage credit ratings for 6 years, so most businesses settle rather than let it go this far.
Step 5: Enforcement (If They Still Won't Pay)
If you win your claim and they still don't pay, you can enforce the judgment:
Options:
- Bailiffs (High Court Enforcement Officers): They visit the debtor's premises and seize assets to cover the debt. Costs ~£100 upfront + % of debt recovered.
- Charging Order: Secures the debt against their property. If they sell, you get paid from the proceeds.
- Third-Party Debt Order: Freezes money in their bank account and transfers it to you.
- Attachment of Earnings: Takes money directly from their salary (if they're employed).
Enforcement isn't cheap, but you can add these costs to the debt. And the threat of bailiffs is often enough to get payment.
What About Very Old Debts? Can You Still Claim?
Yes — up to 6 years.
In England, Wales, and Northern Ireland, you can claim statutory interest on commercial debts up to 6 years in the past (5 years in Scotland).
Why this matters: If a client owes you £5,000 from 2021 and you never chased it, you can still file a claim in 2026 and add 5 years of accrued statutory interest on top.
Let's calculate:
- Original debt: £5,000
- Interest rate: 12% (current rate as of 2026)
- 5 years = 1,825 days
- Interest: (£5,000 × 0.12) ÷ 365 × 1,825 = £3,000
- Fixed compensation: £70
- Total claim: £8,070
Suddenly that old unpaid invoice is worth chasing.
What If You Didn't Have a Written Contract?
You still have rights.
The Late Payment Act applies to all commercial contracts — written or verbal. Even if you never signed anything, if you provided a service and invoiced for it, the 30-day default payment term applies.
What you'll need to prove:
- You provided the service/goods
- The client accepted them
- You sent an invoice
- They haven't paid
Evidence:
- Email correspondence confirming the work
- The invoice itself
- Proof of delivery (emails, screenshots, completed files)
- Any acknowledgment from the client that they owe you
Courts deal with "no written contract" disputes all the time. As long as you can demonstrate the work happened and they benefited from it, you have a case.
Common Excuses & How to Counter Them
"We didn't receive the invoice"
Response: "I sent it on [date] to [email address]. I'm attaching it again now. Please confirm receipt and expected payment date."
(Always keep proof you sent invoices — email receipts, CRM logs, etc.)
"We're waiting on finance to approve it"
Response: "I understand internal processes take time, but the invoice is now [X] days overdue. Under the Late Payment Act, statutory interest is accruing daily. Can you confirm a specific payment date?"
(This shifts responsibility. If they can't give you a date, escalate.)
"We only pay on [specific day of the month]"
Response: "That's fine for future invoices, but this one is already overdue. The Late Payment Act allows me to charge interest on late B2B payments. I'll need this settled within 7 days to avoid additional charges."
(Their internal payment schedule doesn't override the law. Don't accept "we pay on the 15th" as an excuse for paying you 60 days late.)
"Your work wasn't up to standard"
Response: "If you had concerns about quality, you should have raised them before the payment deadline. You can't withhold payment without a valid dispute process. If you believe there's a quality issue, let's arrange mediation. Otherwise, payment is due immediately."
(This is a common stalling tactic. Unless they formally disputed the work in writing **before* the deadline, they can't withhold payment after accepting delivery.)*
What About "Grossly Unfair" Payment Terms?
If a large company forces you into 90-day payment terms, you can challenge this under the Late Payment Act.
The law says payment terms are "grossly unfair" if:
- They're significantly longer than 30 days (the statutory default)
- They exploit the stronger party's position
- They're not commercially justified
Example: A £10m turnover company demanding 90-day terms from a sole trader freelancer earning £30k/year would likely be considered grossly unfair.
What you can do:
- Refuse to sign contracts with unreasonable terms
- Negotiate shorter terms (offer early payment discounts)
- If already signed, you can still challenge in court if they don't pay on the agreed date
Tools & Resources to Get Paid Faster
Free UK Government Tools
- Money Claim Online: https://www.moneyclaim.gov.uk/
- Late Payment Interest Calculator: https://www.gov.uk/late-commercial-payments-interest-debt-recovery
Templates You Can Use Today
Need ready-to-send reminder emails, formal notices, and letters before action?
Download the Getting-Paid Toolkit →
Includes:
- 12 email templates (polite reminder → formal legal notice)
- Letter before action (MCOL-ready format)
- Late payment interest calculator spreadsheet
- MCOL step-by-step filing guide
£19 — instant download.
Automate Your Invoice Reminders
Chasing late payments manually is exhausting. Landolio's Invoice Follow-Up tool sends automatic reminders on your behalf:
- Day 7: Friendly reminder
- Day 30: Formal late payment notice
- Day 45: Letter before action
Free plan: 3 invoices/month.
Summary: Your Late Payment Legal Rights Checklist
✅ Payment is late 30 days after invoice or delivery (whichever is later)
✅ You can charge 12% annual interest (8% + BoE base rate as of Feb 2026)
✅ You're entitled to £40-£100 fixed compensation (depending on invoice size)
✅ You can claim backdated interest up to 6 years (England/Wales/NI)
✅ You don't need a written contract (Late Payment Act applies to all B2B transactions)
✅ Money Claim Online costs £35-£455 (depending on claim size) and you can add this to your claim
✅ CCJs damage their credit for 6 years (powerful leverage to get paid)
Next Steps
If you have an unpaid invoice right now:
- Calculate what you're owed (original amount + interest + compensation)
- Send a formal late payment notice (use the template in Step 2 above)
- Set a 7-day deadline (then escalate if ignored)
- File an MCOL claim if they don't pay (don't wait forever — the longer you wait, the less likely you are to recover)
The law is on your side. Most freelancers never chase late payments because they don't know their rights or they're afraid of damaging the client relationship.
Here's the truth: a client who doesn't pay you isn't a client worth keeping.
Use your legal rights. Get paid.
Need help drafting your late payment claim?
Get the Getting-Paid Toolkit — £19 →
Includes everything you need to recover unpaid invoices: templates, calculators, MCOL guide, and more.
Related guides:
- How to Write an Unbreakable Freelance Contract (2026 Template)
- The Freelancer's Guide to Small Claims Court (UK)
- How to Vet Clients Before You Work With Them
Disclaimer: This guide is for informational purposes and does not constitute legal advice. For complex disputes, consult a solicitor.
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