Plain-English guide · Updated 3 May 2026

What to do when a client doesn't pay: the UK late payment law, in plain English

You sent the invoice. You included the bank details. You added a polite line about your terms. The due date came and went. You sent a follow-up. They said sorry, this week, this week, definitely this week. It is now four weeks past due. The work was done. You were promised £3,200 and you are owed £3,200. And every day you spend chasing it is a day you're not earning the next thing.

You are, by your client's own admission, owed money for work delivered. The thing that's missing is the money. This is what the law has to say about that.

What changed in March 2026

On 24 March 2026 the UK government published the most significant package of late-payment reforms in over a decade. The headlines:

• A new statutory cap of 60 days on payment terms for most B2B contracts, dropping to 30 days for invoices issued by small businesses to large.
• Mandatory statutory interest — clients can no longer wave it off as "uncommercial" or use a contract clause to opt out.
• Expanded powers for the Office of the Small Business Commissioner to fine repeat late payers and publish league tables.

If you're a freelancer, sole trader or small business in the UK, this matters because it strengthens an existing right that already exists and that most freelancers don't use: the right to charge interest, plus a fixed fee, on every late invoice.

The right has been on the books since 1998. The reforms make it harder for big clients to ignore. But the calculation, and the demand notice, are still on you.

The right you already had

The Late Payment of Commercial Debts (Interest) Act 1998 is one of the most under-used pieces of UK legislation by the people it was written for. It says, in essence:

Any business owed money by another business under a written or oral contract has a statutory right to claim interest on the unpaid amount, plus a fixed compensation fee, without needing the client's agreement and without needing to mention it in the original contract.

That last part is the bit most people don't know. You don't have to put it in your terms. You don't have to warn them. You don't have to threaten. The right exists by default, the moment the client misses the agreed payment date.

Who it applies to

• Sole traders, freelancers, partnerships, ltd companies
• Any B2B work (consumer transactions are excluded — different law)
• Goods and services
• Written contracts, oral contracts, and even handshake deals where there's evidence of agreement

Who it doesn't

• Personal/consumer transactions
• Amounts the client genuinely disputes (only undisputed-but-late amounts)
• Invoices more than six years past their due date (statute-barred under the Limitation Act 1980)

How much you can claim

Two figures, added together.

1. Statutory interest

The rate is the Bank of England base rate plus 8% per annum. As of May 2026, that's 11.75% (BoE 3.75% + 8%).

Importantly, the rate is fixed in six-month windows, not at the moment you decide to calculate. For interest accruing 1 January to 30 June, you use the BoE rate as it stood on the previous 31 December. For 1 July to 31 December, the previous 30 June rate.

This is the bit the free calculators get wrong. If your invoice is overdue across a 30 June or 31 December boundary, you have to split the calculation in two and use a different statutory rate for each window. Apply 11.75% across the lot and you'll either over- or under-charge.

The interest is simple, not compounding. Interest doesn't earn interest. The formula is:

daily interest = (principal × statutory rate) / 365
total interest = sum of (daily interest × days in each rate window)

Use the calculator to do this for you →

2. Fixed compensation

On top of interest, you can claim a one-off compensation fee per overdue invoice, scaled to the size of the original invoice:

That's per invoice, not per chase. If a client has six invoices overdue, you can claim six lots of compensation.

The fee is meant to cover your "reasonable costs of recovering the debt" — phone calls, emails, your time. The Act sets it as a flat figure precisely so you don't have to itemise.

A worked example

Let's run a real scenario. You're a freelance illustrator. You sent an invoice for £3,200 on 1 February 2026, terms net 30 days. The due date was 1 March 2026. It's now 3 May 2026. The client has not paid, has not disputed, and has stopped replying to your emails.

The client doesn't owe you £3,200. They owe you £3,334.90. And it goes up by £1.03 every day they wait.

Run your own number →

What to actually say to the client

The maths is the easy part. The conversation is the part most people stall on.

You don't need a solicitor. You don't need to threaten court. You need a single, calm email that establishes three things:

1. The original amount was due on a specific date and has not been paid.
2. Under the Late Payment of Commercial Debts (Interest) Act 1998, you are now claiming the original principal plus statutory interest plus fixed compensation.
3. Here are the exact figures, here is the new total, here is the new payment date.

Something like:

That's it. No apology, no "just following up", no "I know things have been busy". You are asserting a legal right. The tone is matter-of-fact, not aggressive. The numbers do the work.

In our experience, this email collects roughly 40% of overdue invoices within seven days. People who were dragging their heels on a £3,200 invoice find £3,200 quite fast when the figure becomes £3,334.90 and ticking.

When the polite route fails

Sometimes the client still doesn't pay. Your options, in escalating order of effort:

1. Small Business Commissioner complaint (free, ~3 months)

If the late payer is a larger business, you can file a free complaint with the Office of the Small Business Commissioner. They mediate, name and shame, and as of the 2026 reforms can now levy fines on repeat offenders. About a third of cases are resolved within six weeks.

2. Letter Before Action (free, ~30 days)

A formal letter giving the client 14–30 days to pay before you start a small claim. Templates are widely available. You write the letter yourself; it doesn't need a solicitor.

3. Money Claim Online (£35–£455 in fees, recoverable)

The small claims court for debts under £10,000. Most freelance late-payment cases fall here. You file online, the client gets 28 days to respond, and if they don't, you get default judgment. Court fees are added to the claim. About 80% of MCOL claims for clear, undisputed debts are paid before they reach a hearing.

Statutory interest at 11.75% continues to accrue while these processes run, so the longer they delay, the more they owe.

Why most freelancers don't do this

Three reasons:

The maths is intimidating. The rate-window methodology, the daily compounding (it's not, but people assume it is), the fixed-fee tiers — it looks like work. It is, in fact, about ten seconds of work if you have a calculator that splits the windows correctly.

The conversation feels confrontational. Asking for what you're owed feels like a confrontation, especially with clients you want repeat work from. Asserting a statutory right feels less personal than asking nicely. The Act is doing the talking, not you.

You don't have a paper trail. A polite "please can you pay" email doesn't establish a clean legal position. A demand notice citing the Act, the figures, and the rate does.

The shortcut

The reason we built Statute — the iOS app — is because all of the above should take about 60 seconds, not an afternoon.

Statute calculates the figures correctly (rate windows handled, fixed fee tiered, simple-not-compounding). It tracks the daily accrual. It generates a one-tap PDF demand notice formatted like a solicitor's letter, with citations to the Act and your bank details for payment. You email the PDF, the client pays, you get paid £64–£300 more than you would have done.

The free web calculator does the maths. The app does the workflow.

For a £3,200 invoice 63 days late, the recovered amount is £134.90. That covers five years of the £24.99/year subscription on a single chased invoice.

Frequently asked questions

The actual point

You are owed money. The law gives you a tool to charge for the cost of being kept waiting. The tool has been on the books for 27 years and as of 2026, the government has made it harder for clients to ignore.

The maths takes ten seconds. The conversation is one calm email. The figures pay for themselves on the first chased invoice.

Charge what you're legally owed.

Calculate what your overdue invoice is worth →