How to Charge Late Payment Interest on an Invoice (UK Freelancers)

If a business client pays your invoice late, UK law lets you add interest and a fixed fee to what they owe. You do not need a clause in your contract, and you do not need a solicitor. What most freelancers lack is the arithmetic and the confidence to send the second invoice.

This guide covers exactly that: when an invoice counts as late, how to work out the interest, what the fixed fee is, and the wording to use. If you are still at the stage of chasing, start with our step-by-step guide on what to do when a client doesn't pay and come back here when you are ready to put a number on it.

The short version

• Who it applies to: business clients and public authorities. The right is to claim from "another business" that pays late for goods or a service.
• The rate: 8% plus the Bank of England base rate, known as statutory interest.
• The fixed fee: £40, £70 or £100 depending on the size of the debt.
• How you claim it: send a new invoice showing the interest and the fee.

All of the rules below are taken from the GOV.UK guidance on late commercial payments, checked on 1 October 2026.

Step 1: Check the invoice is actually late

You can only charge interest from the day after payment was due, so pin that date down first.

If you agreed a payment date, the invoice is late the day after it. GOV.UK says an agreed date must usually be within 30 days for public authorities or 60 days for business transactions. Businesses can agree longer than 60 days, but only if it is fair to both sides.

If you agreed nothing, the law treats the payment as late 30 days after the later of:

• the customer getting your invoice, or
• you delivering the goods or providing the service.

So "payment terms: 14 days" on an invoice the client accepted gives you a late date on day 15. No terms at all gives you day 31.

Step 2: Work out the interest

Statutory interest for business to business transactions is 8% plus the Bank of England base rate. The Bank of England held its rate at 3.75% on 17 September 2026, which makes the rate in the examples below 11.75%. Check the current Bank Rate before you send anything, because it moves.

The calculation has three steps:

1. Annual interest = amount owed x the statutory rate
2. Daily interest = annual interest / 365
3. Interest due = daily interest x number of days late

Worked example: a £1,500 invoice paid 45 days late

Step	Sum	Result
Annual interest	£1,500 x 0.1175	£176.25
Daily interest	£176.25 / 365	48p
Interest for 45 days	£0.4829 x 45	£21.73

Worked example: a £600 invoice paid 30 days late

Step	Sum	Result
Annual interest	£600 x 0.1175	£70.50
Daily interest	£70.50 / 365	19p
Interest for 30 days	£0.1932 x 30	£5.79

The interest on its own is rarely a large sum. On a small invoice the fixed fee in the next step is worth far more, and it is the part that tends to get a client's attention.

Step 3: Add the fixed debt recovery fee

On top of interest you can charge a fixed sum for the cost of recovering a late commercial payment. The amounts are set by the late payment legislation:

Amount of debt	What you can charge
Up to £999.99	£40
£1,000 to £9,999.99	£70
£10,000 or more	£100

You can only charge this once for each payment. If chasing the debt genuinely costs you more than the fixed sum, you can also claim reasonable costs each time you try to recover it.

Putting the two examples together:

	£1,500 invoice, 45 days late	£600 invoice, 30 days late
Original invoice	£1,500.00	£600.00
Statutory interest	£21.73	£5.79
Fixed fee	£70.00	£40.00
Total now due	£1,591.73	£645.79

Step 4: Send a new invoice

GOV.UK is clear on the mechanics: send a new invoice if you decide to add interest to the money you are owed. Do not just mention it in an email and hope.

A covering note along these lines works:

Invoice 0142 for £1,500.00 was due on 1 August 2026 and remains unpaid. Under the Late Payment of Commercial Debts (Interest) Act 1998 I have added statutory interest of £21.73 (45 days at 11.75%) and a fixed debt recovery charge of £70.00. The total now due is £1,591.73. Interest continues to accrue at 48p a day until payment is received.

Keep it factual. The daily figure in the last line matters, because it tells the client that waiting costs them money.

What if your contract already sets an interest rate?

Then the contract wins. You cannot claim statutory interest if there is a different rate of interest in a contract, so read your own terms before you calculate anything. One protection worth knowing: you cannot use a lower interest rate if you have a contract with a public authority.

If your current terms say nothing about late payment, statutory interest applies by default. It still helps to state it on your invoices and in your contract, because a client who has seen it in writing is less likely to argue later. Our guide to negotiating freelance rates and contracts covers the other payment terms worth agreeing up front, including deposits.

Should you actually charge it?

Having the right and using it are different decisions. A few honest rules of thumb:

• A good client who is a week late once: a reminder is usually enough. Charging £40 on a relationship worth thousands a year is rarely the smart move.
• A repeat late payer: tell them in writing that future late invoices will carry statutory interest and the fixed fee, then do it. Many freelancers find the warning alone fixes the pattern.
• A client who has gone quiet: add interest and the fee to your formal demand. If you end up making a court claim, the figures are already documented.
• A client you no longer want: charge everything you are entitled to.

Relying on one slow payer is the real risk here, so it is worth spreading your income across several clients and keeping a cash buffer, both covered in our guide to managing freelance finances and taxes.

Frequently asked questions

Can I charge late payment interest if it is not in my contract? Yes. If another business is late paying for goods or a service, you can claim statutory interest and debt recovery costs. A contract only changes things if it sets a different rate of interest, in which case that rate applies instead.

What is the statutory interest rate in the UK right now? It is 8% plus the Bank of England base rate for business to business transactions. With the base rate at 3.75% in September 2026, that is 11.75% a year.

How much is the late payment fee? £40 for a debt up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. It can be charged once for each late payment.

When does an invoice become late if I set no payment terms? 30 days after the customer gets the invoice, or 30 days after you deliver the goods or provide the service if that is later.

Do I have to send a new invoice to claim interest? Yes. GOV.UK says to send a new invoice if you decide to add interest to the money you are owed.

Can I charge interest to a private individual? The rules in this guide cover late payment by another business or a public authority. For a private customer, what you can charge depends on the terms you agreed with them, so put your late payment terms in writing before the work starts.

Related guides

• What to do when a UK client doesn't pay: the full escalation route, from reminder to Money Claim Online
• How to negotiate freelance rates and contracts: the payment terms to agree before you start
• Finding freelance clients: building a client base that does not depend on one slow payer
• Managing your freelance finances and taxes: invoicing and cash flow basics