Clients who pay late: your rights and how to chase

Last checked 19 October 2026

Late payment is one of the most stressful parts of working for yourself. You’ve done the work, and now you’re waiting. This guide explains the rights GOV.UK describes, a calm routine for chasing, and the formal options if a customer still won’t pay. We explain how the rules work; we can’t tell you whether to take action on a particular debt.

Prevention first

Many late payments start with unclear terms. Things that help, before you start the work:

• Agree payment terms upfront, in writing, and repeat them on the invoice.
• Invoice promptly, with everything GOV.UK says an invoice must include. Our guide to how to write an invoice has the full list.
• Make it straightforward to pay, with your bank details or a payment link on the invoice.
• Consider deposits or staged payments for larger jobs. GOV.UK’s invoicing guide says you can set your own payment terms, including payment upfront.

When does a payment become late?

GOV.UK’s Late commercial payments guide covers payments between businesses. It says:

• if you agree a payment date, it must usually be within 30 days for public authorities or 60 days for business transactions
• you can agree a longer period than 60 days for business transactions, but it must be fair to both businesses
• if you don’t agree a payment date, the law says payment is late 30 days after the customer gets the invoice, or after you deliver the goods or provide the service, if that’s later

Statutory interest

GOV.UK says the interest you can charge another business that pays late is “statutory interest”: 8% plus the Bank of England base rate for business to business transactions. You can’t claim statutory interest if there’s a different rate of interest in your contract. GOV.UK also says you have the right to charge interest, but you can choose not to.

The Bank of England showed Bank Rate at 3.75% when we checked on 19 October 2026. The base rate that counts isn’t always today’s: the rate of interest order uses the rate in force on 30 June (for debts that become late between 1 July and 31 December) or 31 December (for debts that become late between 1 January and 30 June). Bank Rate was 3.75% on both 31 December 2025 and 30 June 2026, so statutory interest on debts that became late in 2026 is 11.75% a year.

GOV.UK gives a worked example, using an older base rate of 0.5%:

GOV.UK says to send a new invoice if you decide to add interest. The Office of the Small Business Commissioner has a free interest calculator for invoices paid late.

Fixed debt recovery sums

On top of interest, GOV.UK says you can charge a business a fixed sum for the cost of recovering a late commercial payment. You can only charge it once for each payment.

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

Source: Late commercial payments: charging interest and debt recovery (GOV.UK). GOV.UK says these amounts are set by late payment legislation, and that a supplier can also claim reasonable costs each time they try to recover the debt.

What about customers who aren’t businesses?

The GOV.UK late commercial payments guide covers payments from other businesses. If your customer is a member of the public, it doesn’t apply in the same way. GOV.UK’s invoicing guide says that unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service. For consumer debts, Citizens Advice or a solicitor can explain your options.

A calm chasing routine

There’s no official chasing script, but many sole traders follow a pattern like this:

1. Before the due date, a short friendly reminder that the invoice is due soon.
2. On the day after the due date, a polite note that the invoice is now overdue, with a copy attached.
3. A week or two later, a phone call. Sometimes there’s a simple reason, such as an invoice sent to the wrong person.
4. Then a firmer written reminder, mentioning that you may add statutory interest and the fixed sum if the customer is a business.
5. A final letter saying what you’ll do next and by when.

Keep a note of every reminder, call and reply. If it does end up in court, a clear record helps.

Formal options

Statutory demand

GOV.UK’s invoicing guide says you can use a statutory demand to formally request payment. If it’s ignored for 21 days, GOV.UK says you can start bankruptcy proceedings against an individual, including a sole trader, who owes you £5,000 or more, or wind up a company that owes you £750 or more. This is a formal step with legal consequences, so read GOV.UK’s guidance carefully and consider speaking to a solicitor first.

Mediation

GOV.UK’s Make a court claim for money guide says a mediation service could be quicker and cheaper than going to court. Mediation is when an impartial person helps both sides work out an agreement. If you make a court claim for £10,000 or less and the customer disputes it, GOV.UK says you’ll have to attend free mediation organised by the court.

The Small Business Commissioner

The Office of the Small Business Commissioner says that if you run a small business in the UK and have an unresolved payment dispute with a larger customer, it may be able to help through its enquiry service.

Before you go to court

If your customer is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies. It expects you to send a Letter of Claim with set documents, including an information sheet and reply form, and normally to give the debtor 30 days to reply before you start a claim. For debts owed by a company, the court’s general rules on pre-action conduct apply instead. Either way, a court can penalise you on costs if you skip these steps.

A county court claim

GOV.UK says you can apply to a county court to claim money you’re owed by a person or business, online or by post. This used to be known as taking someone to the “small claims court”. You must pay a court fee, based on the amount you’re claiming plus any interest; GOV.UK lists the current fees and explains help with fees for people on a low income. There’s a different process in Scotland and Northern Ireland.

Changes on the way

The government’s Commercial Payments Bill was introduced to Parliament in May 2026. GOV.UK says it would:

• impose maximum payment terms of 60 days, with strictly limited exemptions
• make interest on late payments mandatory at 8% above the Bank of England base rate
• give suppliers the right to a fixed sum when a purchaser raises a dispute late or without enough information
• ban deducting and withholding retention payments in construction contracts, with timing to be consulted on
• give the Small Business Commissioner new powers, including to investigate, adjudicate disputes and fine larger businesses

When we checked Parliament’s bill tracker on 19 October 2026, the bill was still in the House of Lords, where it started. It had finished report stage on 15 September 2026, with third reading scheduled for 20 October 2026. After that it still has to go through the House of Commons, so it isn’t law yet. GOV.UK says there will be a lead-in time and a transition period, and the changes won’t apply retrospectively. We’ll update this guide when it passes.

Late payment and your tax

If you use cash basis accounting, which GOV.UK says is the default from the 2024 to 2025 tax year, you only record income when you receive it. GOV.UK’s expenses guide says that if you use traditional accounting, you may be able to claim for bad debts you’ve included in turnover but will never receive. An accountant can explain how this applies to you.

Frequently asked questions

Can I charge interest to a customer who pays late?

If the customer is another business, GOV.UK says you can claim statutory interest of 8% plus the Bank of England base rate, unless your contract sets a different rate.

Do I have to charge interest?

No. GOV.UK says you have the right to charge interest for late payment, but you can choose not to.

How much is the fixed late payment fee?

GOV.UK says £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, once per payment.

Is the new 60 day limit law yet?

Not when we checked on 19 October 2026. The Commercial Payments Bill was still going through Parliament.

Sources

All checked on 19 October 2026.

• Late commercial payments: charging interest and debt recovery (GOV.UK)
• Invoicing and taking payment from customers (GOV.UK)
• Make a court claim for money (GOV.UK)
• Make and serve a statutory demand (GOV.UK)
• Pre-Action Protocol for Debt Claims (Ministry of Justice)
• Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (legislation.gov.uk)
• Commercial Payments Bill: overview (GOV.UK)
• Commercial Payments Bill (HL) (UK Parliament)
• Interest rates and Bank Rate (Bank of England)
• Office of the Small Business Commissioner
• Expenses if you’re self-employed (GOV.UK)