Ask any freelancer what they dislike most about the job, and “chasing invoices” comes up almost every time. You did the work, you sent the invoice, and now you are stuck sending awkward reminders and feeling like a nuisance for asking to be paid for something you have already delivered, while your own bills sit there waiting.
What a surprising number of UK freelancers do not realise is that when another business pays you late, you are not only morally owed your money. You have automatic legal rights to charge interest and claim compensation on top of the debt, whether or not your contract mentions either. Most people never use those rights, usually because they do not know they exist. This guide explains what you are actually entitled to, how to work it out, and how to use it to get paid faster without wrecking the relationship.
The law that is already on your side
The law in question is the Late Payment of Commercial Debts (Interest) Act 1998. It gives UK businesses, including sole traders and freelancers, the right to charge a late-paying business customer two things: statutory interest on the overdue amount, and a fixed sum in compensation for the hassle of chasing.
The important bit is that these rights are automatic. You do not need a special clause in your contract, and the client does not need to have agreed to it. The moment a qualifying commercial invoice goes past its due date, the right applies.
There is one limit worth being clear about. This covers business-to-business payments. If your customer is another business or a public authority, you are protected. If you are chasing a private individual acting as a consumer, these particular rights do not apply, and different rules govern what you can charge.
Statutory interest: what you can charge
Statutory interest is set at the Bank of England base rate plus 8 percentage points.
As of mid-2026, with the base rate at 3.75%, the statutory interest rate on the overdue amount is 11.75% per year. Because the base rate changes, this figure moves with it and is actually fixed in six-month blocks. Invoices that fall overdue in the first half of the year use the base rate as of 31 December, and those overdue in the second half use the rate as of 30 June. In practice, the base rate rarely swings much, so the number stays fairly stable, but if you are ever taking a claim to court, use the correct rate for the period and check the current figure first.
It is simple interest rather than compounded, and it starts accruing the day after the payment is due and continues until the debt is settled. If no payment terms were agreed upon, the default is 30 days.
Fixed compensation: the part that adds up
In addition to interest, you can claim a fixed sum per overdue invoice to cover recovery costs. The amount depends on the size of the debt: £40 for a debt up to £999.99, £70 for a debt of £1,000 to £9,999.99, and £100 for a debt of £10,000 or more.
This is per invoice, not per client. So if a customer owes you three separate overdue invoices, you can claim the fixed sum on each one. And if your actual, reasonable costs of chasing the debt come to more than the fixed sum, say you had to pay a solicitor or a collection agency, you can claim the difference on top, as long as you can justify it.
A worked example
A real number makes this clearer. Say you invoiced a business client £5,000 for a completed project, with payment due 30 days after the invoice, and they pay 30 days late.
At a statutory rate of 11.75%, the annual interest on £5,000 is £587.50. Divide that by 365 for a daily figure of about £1.61, then multiply by the 30 days they were late, and you get roughly £48 in interest. Add the £70 fixed compensation because the debt falls within the £1,000 to £9,999.99 band, and you are entitled to claim around £118 on top of the original £5,000.
On its own, £118 might not change your month. But two things are worth noticing. On smaller invoices, the fixed fee does most of the work, so it is always worth claiming both. And the real value here is not the money at all; it is what mentioning it does to a client’s payment behaviour, which is where the practical part comes in.
How to actually use these rights
You rarely need to go anywhere near a court. In most cases, simply knowing the rights exist changes the way you chase, and that alone tends to do the job.
The first step is an informed reminder. When an invoice goes overdue, send a polite but firm note stating that statutory interest is accruing and the daily amount. Something like: “Invoice #123 is now overdue. Under the Late Payment of Commercial Debts Act, statutory interest is accruing at roughly £1.61 per day.” Nobody enjoys watching a debt tick upward, and that single line gets a remarkable number of invoices paid within days.
If the reminder does not work, the second step is an interest invoice. Calculate the interest and compensation owed, and send a separate invoice for that amount, referencing the original invoice. This formalises the claim and makes it clear you know your rights and intend to use them.
The third step is escalation, and most freelancers never reach it. For debts under £10,000, you can use the small claims track through Money Claim Online. Court fees vary with the size of the claim and can be added to what you are claiming. Above that figure, you will probably want a solicitor. In reality, the first two steps clear the overwhelming majority of late payments long before this.
What is changing in 2026
Late payment reform has been a live political topic, and the government has signalled the most significant changes in decades. Proposals set out in 2026 point towards making statutory interest harder to contract out of, tightening payment terms, and giving regulators more power to penalise persistent late payers. The details are still being worked through, but the direction is clear enough: the law is moving further in favour of small suppliers, not away from them. It is worth keeping an eye on GOV.UK for the current position, because the specifics may shift.
Better than chasing is not needing to
Enforcing your rights is satisfying, but not having to is better still, and a few habits cut late payments right down.
Set clear terms up front. Put your payment window, 14 or 30 days is common, on every invoice and in your contract, and add a line noting that statutory interest applies to overdue amounts. That line alone deters many late payers. Take deposits on larger projects, since asking for money before you start filters out the worst payers and protects your cash flow. And invoice promptly and, ideally, automatically, because the faster and more consistent your invoicing, the fewer excuses there are, and automated reminders mean overdue invoices get chased the same way every time without you having to steel yourself for the awkward email. I cover how to set that up in my guide to automating client invoicing, and it works nicely alongside the knowledge that your legal backstop is there if a client still drags their feet.
Where this leaves you
You are not powerless when a business client pays late. UK law gives you an automatic right to statutory interest, currently 11.75% a year, plus fixed compensation of £40 to £100 per overdue invoice, with no contract clause needed. You rarely have to enforce it in court because just showing that you know your rights is usually enough to get you paid.
So put clear terms on your invoices, mention that interest applies, and chase with confidence. The freelancers who get paid on time are not luckier than everyone else. They are the ones who treat their time and their invoices as though they have real value, because they do.
FAQs
Can I really charge interest on a late invoice without a contract clause?
Yes, for business-to-business invoices. The Late Payment of Commercial Debts (Interest) Act 1998 gives you an automatic right to statutory interest and fixed compensation, even if your contract says nothing about late fees.
How much interest can I charge on a late payment in the UK?
Statutory interest is the Bank of England base rate plus 8%. As of mid-2026, that is 11.75% a year on the overdue amount. Always check the current base rate, as the figure moves with it.
What is the fixed compensation for a late invoice?
A one-off sum per overdue invoice: £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. It is per invoice, and you can claim reasonable additional recovery costs above that amount.
Does this apply if my client is a private individual?
No. These particular rights apply to business-to-business and business-to-public-authority debts. Chasing a consumer is governed by different rules and your agreed terms.
What if the client still will not pay?
Escalate. Send an interest invoice, then, for debts under £10,000, consider the small claims track via Money Claim Online. Most late payments settle well before this once the client sees you know and will use your rights.
This guide is general information, not legal advice. Rates and rules change, and individual situations differ, so check GOV.UK or speak to a qualified professional before taking formal action.
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- How to Set Up No-Code Automation for Client Onboarding
Small Business & Productivity Writer
James Whitfield writes about the tools, software, and automation that help UK freelancers and small businesses work smarter. He tests apps hands-on and breaks down what actually works, without the jargon.