What you're legally owed
When a B2B invoice goes unpaid in United Kingdom, the governing statute is Late Payment of Commercial Debts (Interest) Act 1998. It gives freelancers and small suppliers automatic rights to statutory interest and a flat compensation fee on every overdue invoice — no contract clause required.
- Statutory interest
- Bank of England base rate + 8 percentage points (B2B)
- ~12.5% per year in early 2026
- Flat compensation fee
- £40 / £70 / £100 (sliding scale)
- fixed sum for late payment compensation
- Default payment term
- 30 days from the later of invoice date or delivery; max 60 days B2B
- Public sector max
- 30 days
These amounts accrue automatically from the day after the invoice due date. You do not need a contract clause to invoke them — the statute creates the right directly. A contract can set a higher rate, but not a lower one.
How to enforce it in United Kingdom
The primary enforcement path for freelancers in United Kingdom is the Money Claim Online (MCOL) / Small Claims Track.
File entirely online for debts up to £100,000 via MCOL. Court fees scale from £35 (debts under £300) to £10,000 (large claims). Undefended cases can result in a default judgment within weeks. No lawyer needed for the small claims track (under £10,000).
Small claims limit: £10,000 (small claims track).
Official portal: www.gov.uk/make-money-claim
What to do this week
- Add a late-fee clause citing LPCDA 1998 to your contract template. Use the freelance contract template as a starting point.
- Add one line to your invoice footer: “Late payments accrue interest under LPCDA 1998 at Bank of England base rate + 8 percentage points (B2B), plus a £40 / £70 / £100 (sliding scale) fixed sum for late payment compensation.”
- When an invoice goes overdue, use the free late-fee calculator to get the exact amount owed, then send a formal demand letter citing the statute. The demand letter guide walks through exactly what to include and what to leave out.
- If the letter's deadline passes, run the escalation playbook — or file directly via the Money Claim Online (MCOL) / Small Claims Track, which is designed to be used without a lawyer for undisputed debts.
One thing most freelancers don't know
The UK's statutory interest rate — Bank of England base + 8 points — is the highest among major English-speaking jurisdictions. Combined with the sliding flat fee, it makes every overdue invoice measurably more expensive the longer it sits.
This guide is a plain-language summary of LPCDA 1998 as it applies to freelancers and small suppliers. It is not legal advice. For disputes over larger amounts, or anything with a contested fact pattern, consult a lawyer admitted in United Kingdom.