UK freelancer late payment rights

Your rights as a UK freelancer

If you are a freelancer, sole trader, or limited company director and a client pays your invoice late, UK law gives you three things automatically:

1. Statutory interest on the overdue amount, currently 11.75% per year.
2. Fixed compensation of £40 to £100 per invoice to cover your recovery costs.
3. The right to claim reasonable recovery costs if the fixed compensation does not cover your actual costs (for example, solicitor fees).

These rights apply to all business-to-business (B2B) transactions. That means any invoice between two businesses, which includes freelancers invoicing companies, agencies, or other freelancers. It does not apply to invoices to private individuals acting in a personal capacity (for example, a portrait photographer invoicing a family).

You do not need to mention any of this in your contract. You do not need to warn the client first. These are automatic rights under UK law.

The Late Payment Act in plain English

The full name is the Late Payment of Commercial Debts (Interest) Act 1998. It has been updated several times since, most recently by EU-derived regulations in 2013 which strengthened the compensation provisions.

In plain English, the Act says: “If a business pays another business late, the business that is owed the money can charge interest and claim compensation. This right cannot be taken away by an unfair contract term.”

That last part is important. A client cannot put “no late payment interest” in their terms and conditions and expect it to hold up. Any contract term that removes your right to statutory interest or compensation is void unless it offers a “substantial remedy” that is fair to you.

Statutory interest: how much can you charge?

The statutory interest rate is 8% plus the Bank of England base rate. As of early 2026, that makes the total rate 11.75% per year (8% + 3.75% base rate).

Interest accrues daily. The formula is simple:

For example, on a £3,000 invoice that is 45 days late:

Use the free late payment calculator to get the exact figure for any invoice.

Fixed compensation for recovery costs

On top of interest, you are entitled to a fixed sum to compensate you for the hassle and cost of chasing the payment. This is per invoice, not per client.

This might not sound like much, but it adds up. If you have five overdue invoices under £1,000, that is £200 in compensation on top of the interest. On smaller invoices, the compensation alone can represent a significant percentage of the original debt.

When does interest start accruing?

Interest starts the day after the agreed payment date. If your invoice says “due within 30 days” and you sent it on 1 March, the due date is 31 March and interest starts on 1 April.

If you did not agree payment terms with the client (no contract, no terms on the invoice), the law sets a default of 30 days from either the date you delivered the goods/services or the date the client received the invoice, whichever is later.

Can your contract override these rights?

Not in a way that leaves you worse off. A contract can set its own late payment interest rate (say, 2% per month), but only if the overall deal is fair to the creditor. If the contract tries to remove your right to interest entirely, or sets an absurdly low rate, that term is void and the statutory rate applies instead.

The legal test is whether the contract term provides a “substantial remedy” for late payment. In practice:

• “No interest on late payments”: void. The statutory rate applies.
• “Interest at 2% per year”: likely void, as it is far below the statutory rate.
• “Interest at 12% per year”: likely valid, as it is a substantial remedy.
• No mention of interest at all: the statutory rate applies automatically.

If in doubt, you can always fall back on the statutory rate. It is the floor, not the ceiling.

Late payment statistics for UK freelancers

If you are being paid late, you are in very large company. Late payment is the single biggest financial issue facing UK freelancers and small businesses.

Sources: IPSE Late Payment Campaign, FSB “Time is Money” Report, QuickBooks UK SMB Late Payments Research.

How to enforce your rights

Knowing your rights is one thing. Actually using them is another. Here is the practical escalation path:

1. Send reminders: start polite, get firmer. See the invoice chasing guide for email templates.
2. Calculate what you are owed: use the late payment calculator to add up interest and compensation.
3. Send a Letter Before Action: a formal demand with a 14-day deadline. See the LBA template and guide.
4. File a court claim: via Money Claim Online if the LBA is ignored. See the small claims court guide.

Most debts get resolved at step 1 or 3. Going to court is relatively rare, and when it does happen, the process is straightforward for claims under £10,000.