If you freelance in the UK, late payment is not a minor annoyance — it is a cash-flow risk. When a client sits on your invoice for weeks, you are effectively lending them money for free. But many freelancers do not realise that UK law already gives them the right to charge for that wait. This guide explains your UK late payment rights as a freelancer in plain English: the statutory interest you can claim, the fixed compensation of £40 to £100 per late invoice, exactly when an invoice legally counts as late, and what the Commercial Payments Bill — the 2026 late-payment reform — would change if it becomes law.

One note before we start: this article explains publicly available information from gov.uk and other published sources. It is not legal advice, and it does not create a lawyer–client relationship. For a disputed or high-value debt, speak to a solicitor.

The law that protects you

Your rights come from the Late Payment of Commercial Debts (Interest) Act 1998. It gives businesses — including sole traders and freelancers — an automatic right to charge interest on commercial debts that are paid late, plus a fixed sum in compensation per late invoice. You do not need to write any of this into your contract or print it on your invoice for the right to exist. It applies automatically to business-to-business (B2B) contracts for the supply of goods or services, unless the contract sets out a “substantial remedy” of its own for late payment — more on that exception below.

The single most important limitation is the B2B one. The Act does not cover invoices to private individuals who are buying from you as consumers. If your client is a business — a company, a sole trader, a partnership, an agency — you are covered. If your client is a private individual, statutory interest does not apply unless your own contract includes a late-payment clause.

When does an invoice legally count as late?

Interest only starts running once payment is actually overdue. Gov.uk sets out three situations:

  1. You agreed a payment date. Payment is late from the day after that agreed date. If you agree a payment date with a business client, it must usually be within 60 days. You can agree a longer period, but only if it is fair to both businesses. For public authorities, the usual limit is 30 days.
  2. You did not agree a payment date. The law then treats the payment as late 30 days after either the customer receives your invoice, or you deliver the goods or provide the service — whichever is later.
  3. Your contract sets a different interest rate. You cannot claim statutory interest if your contract already specifies its own rate of interest for late payment. (And if you contract with a public authority, you cannot use a rate lower than the statutory one.)

This is why stating payment terms on your invoice matters even though the right itself is automatic. If your invoice says “payment due within 14 days”, the clock starts on day 15. If it says nothing, you wait the default 30 days before the invoice counts as late. If you want a refresher on getting the paperwork right, see our freelancer invoice template guide.

One more practical point: some clients push long payment terms on freelancers as a matter of policy — 60 or 90 days “standard”. Terms beyond 60 days are only lawful between businesses if they are fair to both sides. A one-sided 90-day term imposed on a solo freelancer by a large corporate client is exactly the kind of arrangement the courts and the reform package have in their sights.

Statutory interest: 8% over the Bank of England base rate

The interest you can charge is called “statutory interest”. For business-to-business transactions it is 8 percentage points above the Bank of England base rate, calculated per year. Because the base rate moves, the statutory rate moves with it — the calculation uses the rate in force when the debt became overdue.

A few mechanics worth knowing:

  • The interest is simple, not compound. It accrues on the original invoice amount only; you do not charge interest on interest.
  • It accrues daily from the day after the payment due date until the day the money actually reaches you.
  • The formula is: (invoice amount × statutory rate) ÷ 365 × days overdue.

Gov.uk illustrates it like this: if you were owed £1,000 and the base rate were 0.5%, the annual statutory interest would be £85 (£1,000 × 0.085), which works out at 23p a day (£85 ÷ 365) — so after 50 days of delay you would be owed £11.50 in interest.

A worked example

Let us walk through a realistic freelancer scenario so you can copy the method for your own invoices.

The facts. You invoice a client £2,500 on 1 March, with payment terms of 14 days. Payment was therefore due on 15 March. The client pays on 29 April — 45 days late. Suppose the Bank of England base rate at the time was 4% (a hypothetical figure to keep the arithmetic clear; plug in the current rate for a live case).

Step 1 — find the statutory rate. 8% + 4% base rate = 12% per year.

Step 2 — find the annual interest. £2,500 × 12% = £300 per year.

Step 3 — find the daily rate. £300 ÷ 365 = £0.8219 per day (about 82p).

Step 4 — multiply by the days overdue. £0.8219 × 45 = £36.99.

So the interest alone is £36.99. But interest is only half of what you are owed — which brings us to the fixed compensation.

The fixed compensation: £40, £70 or £100 per invoice

On top of interest, the Act entitles you to a fixed sum as compensation for the cost of recovering a late payment. It depends on the size of the debt:

Invoice value Fixed compensation
Up to £999.99 £40
£1,000 to £9,999.99 £70
£10,000 or more £100

This is per invoice, not per client, and it is owed in addition to the interest. Gov.uk notes that you can only charge this fixed sum once for each late payment, but it also describes a separate right: as a supplier, you can claim reasonable costs each time you try to recover the debt — so if your actual recovery costs exceed the fixed sum, the excess is claimable too.

Finishing our worked example: the £2,500 invoice falls in the £1,000–£9,999.99 tier, so you can claim £70 in fixed compensation. Added to the £36.99 of interest, the client’s 45-day delay cost you a claimable £106.99 — money the law says is yours.

Want to run your own numbers? Our late payment interest calculator does this exact calculation in seconds — and copies the result as a polite line you can paste into a chasing email.

Notice what this means at small scale. A £600 invoice paid 30 days late, with the same hypothetical 4% base rate: interest is (£600 × 12% ÷ 365) × 30 = £5.92, plus £40 compensation = £45.92. The interest is modest; the compensation is the part that makes claiming worthwhile on small invoices. That is by design — it is meant to deter late payment, not just compensate for it.

The “substantial remedy” exception

There is one way a contract can set aside the statutory regime: if it provides a “substantial remedy” for late payment of its own — a contractual interest rate or late-payment mechanism strong enough to compensate the supplier or deter late payment. Whether a clause qualifies depends on the circumstances, and the bar is not low. The point for freelancers is simple: check what your contract actually says. If it names a specific late-payment interest rate, that rate governs and you cannot stack statutory interest on top. If it says nothing about late payment, the Act applies in full.

How to claim in practice

The law gives you the right automatically, but the money does not arrive on its own. Here is the practical sequence:

  1. Check the clock. Confirm the invoice is genuinely overdue under your payment terms (or the 30-day default if no terms were set).
  2. Calculate interest and compensation. Use the formula above, or our worked example as a template. Gov.uk advises sending a new invoice if you decide to add interest to the money you are owed.
  3. Write, don’t just threaten. The right works best as a fact stated calmly, not a weapon waved aggressively. See the script below.
  4. Keep records. Note the invoice date, the due date, the date payment arrived, your calculation, and copies of every message. If you ever need to escalate, this paper trail is everything.

Most freelancers never actually charge statutory interest on a live client relationship — and that is fine. Knowing the number exists changes the conversation. It lets you say “I am owed X” rather than “please, when you get a chance”.

Mentioning your rights without threatening the client

You want to be firm without burning the relationship. Here is a short template you can adapt. Send it after the invoice is overdue, and keep the tone matter-of-fact:

Subject: Overdue invoice #[number] — £[amount]

Hi [name],

I’m writing about invoice [number] for £[amount], which was due on [date] and is now [n] days overdue.

I wanted to flag that under the Late Payment of Commercial Debts (Interest) Act 1998, I’m entitled to statutory interest on late commercial payments (currently [X]% a year — 8% above the Bank of England base rate) plus fixed compensation of £[40/70/100] for this invoice. I’d much rather we resolve this simply.

Could you let me know when I can expect payment? If there’s an issue with the invoice itself, I’m happy to sort it out straight away.

The structure is deliberate: the rights are stated as background facts, not demands, and the email ends with an easy next step. For the full chasing sequence — first nudge, firmer follow-up, and final notice — see our payment reminder email template and the step-by-step guide on how to chase late payments.

The 2026 reform: what the Commercial Payments Bill would change

So much for the law as it stands today. A major reform package is currently moving through Parliament, and if you follow UK business news you will have seen the headlines. Here is what is actually proposed — and the honest caveat that none of it is law yet.

The Commercial Payments Bill was introduced to the House of Lords in May 2026 (it was initially floated under the name of the Small Business Protections Bill, and some coverage still uses that name). It completed its Lords report stage in September 2026, with third reading scheduled for 20 October 2026. After that, it still has to pass through the Commons and receive Royal Assent. In other words: the proposals below are live legislation in progress, not rules you can rely on today. Implementation is widely expected during 2027, but the final detail may still change.

The context is stark: research commissioned by the government and the Small Business Commissioner in 2025 estimated businesses were owed £26 billion in overdue payments at any given time, with late payment costing the UK economy almost £11 billion a year.

Here is what the Bill as drafted would do:

  • Cap payment terms. Maximum payment periods of 60 days for private-sector contracts and 30 days where the purchaser is a public authority, with strictly limited exemptions. Terms exceeding the caps would be automatically void and replaced by the statutory defaults, regardless of what the contract says.
  • Make statutory interest mandatory. The 8%-over-base-rate interest would become an implied term that parties can no longer contract out of. This closes the “substantial remedy” escape route described above: silence or weak clauses would no longer be enough to avoid the statutory rate.
  • Put a time limit on invoice disputes. Buyers would have to raise invoice disputes within a specified timeframe. A dispute raised too late, or without sufficient information, would entitle the supplier to recover a fixed sum. This targets the familiar tactic of disputing an invoice months later as a way to reset the clock.
  • Strengthen the Small Business Commissioner. The Commissioner would gain an adjudication scheme for payment disputes, powers to investigate persistent poor payment practices by larger businesses, and the ability to issue enforcement directions, publish findings, and impose financial penalties of up to 1% of a business’s UK annual turnover.
  • Ban retentions in construction. The Bill proposes prohibiting the practice of withholding retention payments in construction contracts in Great Britain, with transitional arrangements.

None of this applies retrospectively — existing contracts would not be rewritten overnight, and the commencement arrangements are still to be confirmed.

What to do before the reform lands

You do not need to wait for the Bill to become law to benefit from its direction of travel:

  • Shorten your own terms now. If your invoice template still says 30 days “because that’s what everyone uses”, consider 14 days. Nothing stops you.
  • Put late-payment interest in your contracts. Even before the reform, a written clause removes ambiguity and makes the script above easier to send.
  • Track dispute behaviour. If a client routinely raises vague queries on day 29, keep the emails. The proposed dispute-deadline rules would reward exactly this kind of record-keeping.
  • Keep an eye on the timetable. The third reading, Commons stages, and commencement dates will determine when the new rules bite. We will update this article as the Bill progresses.

What the reform will not fix

New legislation, even if it passes in full, will not send your reminder emails for you. The Bill changes what you can claim and what terms are lawful; it does not change the unglamorous work of noticing an invoice is overdue on day 15 and following up on day 16. The freelancers who get paid on time are the ones with a system: clear terms up front, an invoice sent the day work is done, a polite nudge the moment the deadline passes, and escalation on a schedule. Our chasing guide walks through that system step by step.

Quick answers

Do I need to mention statutory interest on my invoice? No — the right applies automatically to B2B contracts. But stating your payment terms and a brief late-payment note makes enforcement easier and deters delay in the first place.

Can I charge interest to a client who is also a freelancer? Yes. The Act applies between any businesses, including sole trader to sole trader, unless your contract provides a substantial remedy of its own.

Can I claim if the client eventually paid? Yes. Interest accrues up to the date payment was actually received, and the fixed compensation is owed per late invoice regardless of whether legal action was taken.

What if the client is based outside the UK? The legislation applies to contracts with a significant connection to the UK. Cross-border enforcement is more complicated — get advice before assuming the same position.

Is the 60-day cap in force now? No. The 60-day cap and mandatory interest are proposals in the Commercial Payments Bill, which is still passing through Parliament. The current law is the 1998 Act described above.

Sources

Reminder: this article is general information, not legal advice. For a disputed or significant debt, consult a solicitor.