VOL. I · Market edition, MMXXVIEngland & Wales · Templates · Reviews · Handoffs
Guide

Getting paid: late payment law for freelancers (England & Wales)

How the Late Payment of Commercial Debts Act 1998 lets freelancers charge statutory interest and fixed compensation when business clients pay late.

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By The Counsel editorial deskReviewed against primary legislation and case law for England & WalesLast reviewed 15 June 2026How we source this →
01

Your statutory right to interest

Under the Late Payment of Commercial Debts (Interest) Act 1998, interest runs automatically on a qualifying business-to-business debt once the agreed payment date passes — you do not need a clause in your contract, because the Act implies the right. The statutory rate is 8% per annum above the Bank of England base rate. With the base rate at 3.75% as of June 2026, the current statutory rate is 11.75% per annum, as simple (not compound) interest from the day after the debt falls due. Check the current base rate, as it changes.

02

Fixed compensation on top of interest

Alongside interest, the Act entitles you to a fixed sum for the inconvenience of late payment: £40 for debts under £1,000; £70 for debts between £1,000 and £9,999; and £100 for debts of £10,000 or more. These apply per invoice, not per client relationship. If your reasonable costs of recovering the debt exceed the fixed sum, you can claim those additional costs too.

03

When payment is due

If your contract specifies a payment date or period (for example net 30 days from invoice), statutory interest starts the day after it. If the contract is silent, the Act defaults to 30 days after the later of delivery of the invoice and delivery of the goods or services. A contractual payment term that is not a ‘substantial remedy’ for late payment, and is in effect grossly unfair, can be set aside.

04

Can a contract opt out of the Act?

Only partly. A contract can substitute a different interest mechanism, but only if that mechanism is a ‘substantial remedy’ for late payment. Courts and arbitrators can set aside contractual interest provisions that fall significantly below the statutory rate without sufficient commercial justification. In practice most freelance contracts either adopt the statutory regime or say nothing, in which case the Act applies in full.

05

How to chase a late payment

Start with a polite but firm written reminder quoting the invoice number, amount, due date, and the fact that statutory interest and compensation are accruing. If that fails, send a formal letter before action stating the total now owed (invoice + interest + compensation) and a deadline, typically 7 to 14 days. Keep records of everything. The small claims track via Money Claims Online handles debts up to £10,000 without a solicitor; for higher-value or disputed debts, take advice.

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Do I need a late-payment clause in my contract to claim statutory interest?

No. The Late Payment of Commercial Debts (Interest) Act 1998 implies the right into all qualifying business-to-business contracts, even if neither party mentions it. You can claim statutory interest and fixed compensation simply by invoking the Act in writing.

Can I charge statutory interest to a consumer client?

No. The Act applies only where both parties act in the course of a business. If your client is a private individual, the Act does not apply and you would need a contractual late-payment clause to charge interest. A solicitor can advise on options for consumer debts.

The Counsel says I can charge interest — can it start proceedings for me?

No. The Counsel is an AI legal information service, not a solicitor, and it cannot initiate or conduct legal proceedings. It can help you understand what the Act entitles you to and draft a letter before action. If the debt is disputed or ignored, you issue a claim yourself via Money Claims Online or instruct a solicitor.

The Counsel is an AI tool for England & Wales. It provides legal information, not legal advice, and does not replace a regulated solicitor. For anything high-value or contested, take advice before you act.

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