Your invoice is three weeks overdue. You have chased twice. The client has gone quiet.
You know you are entitled to interest — you have heard the term statutory interest — but you are not sure what the rate is, when the clock starts, or how to ask for it without sounding aggressive.
This is where most UK freelancers hesitate. They know interest exists, but they do not know how to calculate it, how to word the demand, or whether it is worth the effort for a £1,200 invoice that is two weeks late.
This guide walks you through statutory interest for UK freelancers step by step: what it is, who can charge it, the current Bank of England base rate and calculation formula, worked GBP examples for designers and developers, invoice notice wording, a pasteable interest demand email, fixed compensation rules, and a decision test for when to charge interest now, waive it, or escalate straight to a letter before action.
What statutory interest is (and why freelancers often confuse it with HMRC interest)
Statutory interest is the interest you can charge clients when a commercial invoice goes unpaid. It is your legal right under the Late Payment of Commercial Debts (Interest) Act 1998.
You do not need to write it into your contract beforehand. The law gives you the right automatically for business-to-business (B2B) and public authority invoices.
Common confusion: commercial debt vs HMRC late payment interest
When people Google "statutory interest" or "late payment interest," they often land on HMRC pages about tax interest — the interest HMRC charges you when you pay tax late.
That is not what this guide is about.
This guide is about the interest you charge your clients for unpaid commercial invoices. HMRC late payment interest is what HMRC charges you. They are two separate things.
Commercial debt interest (this guide):
✓ You charge clients for unpaid invoices
✓ Rate: Bank of England base rate + 8%
✓ Governed by Late Payment of Commercial Debts Act 1998
HMRC late payment interest (not this guide):
✓ HMRC charges you for unpaid tax
✓ Different rates (Corporation Tax, VAT, Self Assessment)
✓ Governed by HMRC tax legislation
If you found this guide while searching for HMRC tax interest, you are in the wrong place. Go to GOV.UK tax payment deadlines.
If you are here because a client owes you money and you want to charge interest, keep reading.
Who can charge statutory interest — B2B and public authority rules
You can charge statutory interest if your invoice is:
✓ Business-to-business (B2B) — you are a freelancer (sole trader or limited company) and your client is a business (limited company, LLP, partnership, sole trader)
✓ Business-to-public authority — your client is a public sector body (council, NHS trust, government department)
You cannot charge statutory interest if your invoice is:
✗ Business-to-consumer (B2C) — your client is an individual buying for personal use (e.g. a wedding photographer invoicing a couple for their wedding photos)
For B2C work, your contract terms determine what interest you can charge. The Late Payment Act does not apply to consumer transactions.
Tip: If you are invoicing a sole trader, that counts as B2B (they are running a business). If you are invoicing an individual for personal use, that is B2C.
Public authority 30-day rule
If your client is a public authority (council, NHS, government department), they must pay within 30 days unless the contract says otherwise. If they take longer, you can charge interest from day 31.
For private sector B2B invoices, the clock starts on your stated due date (e.g. Net 14, Net 30).
Source: GOV.UK — Late commercial payments: charging interest and debt recovery
The statutory interest rate — Bank of England base rate plus 8%
The statutory interest rate is:
Bank of England base rate + 8% per year
As of 10 September 2026, the Bank of England base rate is 3.75%.
Statutory interest rate = 3.75% + 8% = 11.75% per year
How to check the current base rate
The base rate changes. Before you calculate interest, check the current rate at bankofengland.co.uk.
Add 8% to get your statutory rate.
Example rates:
| Base rate | Statutory rate (base + 8%) |
|---|---|
| 3.00% | 11.00% |
| 3.75% | 11.75% |
| 4.50% | 12.50% |
| 5.00% | 13.00% |
Which base rate do I use if it changes mid-invoice?
Use the rate that applied when the debt became overdue (the day after the due date). If the base rate changes while the invoice is still unpaid, you continue using the original rate for simplicity, or you can recalculate using the new rate for the period after the change. Most freelancers stick with the original rate — it is simpler and defensible.
When statutory interest starts — due date rules
Interest starts accruing the day after the invoice due date.
Example:
- Invoice due date: 15 August 2026
- Invoice remains unpaid
- Interest starts: 16 August 2026
Count from 16 August to the date you send your interest demand (or the date the client pays). That is the number of days overdue.
What if my invoice does not state a due date?
If your invoice does not state a due date, the law assumes 30 days from the date you delivered the work or sent the invoice (whichever is later).
Best practice: Always state a clear due date on your invoice. "Net 14" or "Due 24 August 2026" removes ambiguity.
For a full guide to invoice payment terms, read our invoice payment terms guide.
How to calculate statutory interest — formula and worked GBP examples
The formula is:
Interest = (Invoice amount × Interest rate × Days overdue) ÷ 365
Let's walk through two realistic examples.
Example 1 — Designer brand identity invoice (£1,400, 21 days overdue)
Scenario:
- You are a freelance designer
- Invoice amount: £1,400
- Due date: 20 August 2026
- Today's date: 10 September 2026
- Days overdue: 21 days (from 21 August to 10 September)
- Interest rate: 11.75% per year (3.75% base + 8%)
Calculation:
Interest = (£1,400 × 0.1175 × 21) ÷ 365
Interest = (£1,400 × 0.1175 × 21) ÷ 365
Interest = £3,448.50 ÷ 365
Interest = £9.45
You can demand £9.45 in statutory interest (or round to £9 for simplicity).
Example 2 — Developer website build invoice (£5,200, 28 days overdue)
Scenario:
- You are a freelance developer
- Invoice amount: £5,200
- Due date: 13 August 2026
- Today's date: 10 September 2026
- Days overdue: 28 days (from 14 August to 10 September)
- Interest rate: 11.75% per year
Calculation:
Interest = (£5,200 × 0.1175 × 28) ÷ 365
Interest = £17,108 ÷ 365
Interest = £46.87
You can demand £46.87 in statutory interest (or round to £47).
Rounding and precision
Most freelancers round to the nearest pound. £9.45 becomes £9, £46.87 becomes £47. This is acceptable.
If the amount is significant (e.g. £120.67), keep the pence. For small amounts under £20, rounding to whole pounds is fine.
Tip: Use a spreadsheet or calculator. Do not calculate in your head — small errors weaken your credibility.
Fixed compensation for debt recovery — £40, £70, or £100
On top of statutory interest, you can claim a fixed debt recovery cost. This compensates you for the time and hassle of chasing the debt.
The amount depends on the invoice size:
| Invoice amount | Recovery cost |
|---|---|
| Up to £999.99 | £40 |
| £1,000–£9,999.99 | £70 |
| £10,000+ | £100 |
Example 1 (designer, £1,400 invoice):
- Original invoice: £1,400
- Statutory interest (21 days): £9
- Debt recovery cost: £70 (£1,400 falls in the £1,000–£9,999.99 band)
- Total demand: £1,479
Example 2 (developer, £5,200 invoice):
- Original invoice: £5,200
- Statutory interest (28 days): £47
- Debt recovery cost: £70 (£5,200 falls in the £1,000–£9,999.99 band)
- Total demand: £5,317
When to claim the fixed compensation:
✓ When you send a formal interest demand email or letter before action
✓ When the invoice has been chased multiple times and the client has not responded
✓ When you want to signal you are serious about escalating
When not to claim it:
✓ On the first polite chase email (too aggressive)
✓ When the client is engaging and has asked for more time (save it for if they default again)
Source: GOV.UK — Late commercial payments: interest and debt recovery
Contractual interest vs statutory interest — which applies?
Your contract may include an interest clause that states a different rate (e.g. "Late payments will incur interest at 15% per year").
Which rate applies?
If your contract interest rate is higher than or equal to statutory interest, the contract rate applies — but only if it is not "grossly unfair."
If your contract interest rate is lower than statutory interest, statutory interest applies instead. The law protects you.
Example:
- Your contract says 5% per year
- Statutory interest is 11.75% per year
- You can charge 11.75% (statutory rate overrides the lower contract rate)
Example:
- Your contract says 15% per year
- Statutory interest is 11.75% per year
- You can charge 15% (contract rate is higher and not grossly unfair)
What is "grossly unfair"?
A contract clause is grossly unfair if it is so one-sided that no reasonable business would agree to it. 15% is defensible. 50% might not be. If your contract rate is extremely high, a court could strike it down and apply the statutory rate instead.
If you have no contract interest clause, statutory interest applies automatically.
Tip: Include an interest clause in your contract. State: "Invoices not paid by the due date will incur interest at [X]% per year or the statutory rate under the Late Payment of Commercial Debts (Interest) Act 1998, whichever is higher." This gives you flexibility.
For clause-by-clause contract wording, read our freelance contract template guide.
Pasteable invoice footer notice — how to warn clients upfront
Prevent late payments by stating your interest rights clearly on every invoice.
Add this note to the footer or payment terms section of your invoice template:
Payment terms: Net 14. Payment is due within 14 days of the invoice date. Late payments are subject to statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 at [current rate]% per year, plus fixed debt recovery costs.
Or shorter:
Late payment: Overdue invoices will incur statutory interest and recovery costs as permitted by law.
This is not aggressive. It is standard practice. Many UK businesses include this wording. It sets the expectation and gives you a clear footing if you need to enforce it.
Tip: Do not invent a high interest rate and call it "statutory." Use the real rate (base + 8%) or keep the wording generic ("statutory interest as permitted by law").
For a complete UK invoice template, read our freelance invoice template guide.
Pasteable interest demand email — before you escalate to LBA
If your invoice is two to three weeks overdue and polite reminders have not worked, send one formal interest demand email before you escalate to a letter before action.
This email states the interest and recovery cost you will claim if the client does not pay immediately.
Interest demand email template
Subject: Outstanding invoice [Invoice Number] — interest and recovery costs now apply
Hi [Client Name],
I am writing regarding invoice [Invoice Number] for £[Invoice Amount], which was due on [Due Date] and remains unpaid.
As of today, this invoice is [Days Overdue] days overdue.
Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to charge statutory interest and debt recovery costs for late payment.
Amount now due:
- Original invoice: £[Invoice Amount]
- Statutory interest ([Days Overdue] days at 11.75% p.a.): £[Interest Amount]
- Debt recovery cost: £[Recovery Cost]
- Total due: £[Total]
I require payment of £[Total] by [Deadline — 7 days from today].
If I do not receive payment by this date, I will escalate this matter to a formal letter before action, which will incur additional costs.
Bank details are on the original invoice (attached).
If there is a genuine issue with payment, please contact me immediately to discuss.
Regards,
[Your Name]
[Your Email] | [Your Phone]
Worked example — interest demand email with real numbers
Subject: Outstanding invoice INV-2026-045 — interest and recovery costs now apply
Hi Sophie,
I am writing regarding invoice INV-2026-045 for £1,400, which was due on 20 August 2026 and remains unpaid.
As of today, this invoice is 21 days overdue.
Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to charge statutory interest and debt recovery costs for late payment.
Amount now due:
- Original invoice: £1,400
- Statutory interest (21 days at 11.75% p.a.): £9
- Debt recovery cost: £70
- Total due: £1,479
I require payment of £1,479 by 17 September 2026.
If I do not receive payment by this date, I will escalate this matter to a formal letter before action, which will incur additional costs.
Bank details are on the original invoice (attached).
If there is a genuine issue with payment, please contact me immediately to discuss.
Regards,
Alex Carter
alex@northlinestudio.co.uk | 07700 900123
When to send this email:
✓ Invoice is 14–21 days overdue
✓ You have sent at least two polite reminders and had no response
✓ You are prepared to escalate to a letter before action if this email is ignored
When to skip this email and go straight to a letter before action:
✓ Invoice is over 30 days overdue and you have chased multiple times
✓ The client has ignored all reminders and you want to signal legal escalation immediately
✓ The debt is large (over £2,000) and you do not want to waste time on another polite email
For a full letter before action template with interest breakdown and court warning, read our letter before action guide.
Decision test — should you charge interest, waive it, or escalate to LBA?
Not every late invoice needs statutory interest. Use this decision tree.
Charge interest now (send demand email) if:
✓ Invoice is 14–28 days overdue
✓ You have sent 2–3 polite reminders with no response
✓ The client has the ability to pay but is not prioritising you
✓ You want to signal seriousness before escalating to a letter before action
✓ The invoice is over £500 (interest on smaller amounts is often not worth the effort)
Waive interest (keep the relationship) if:
✓ The client has a genuine reason for the delay (internal approval process, cashflow issue, one-off mistake)
✓ They are communicating with you and have committed to a payment date
✓ The delay is under 14 days and you have an ongoing relationship
✓ The invoice is under £500 and you would rather keep the client than chase £5 in interest
✓ You plan to work with them again and the late payment is unusual
Escalate straight to letter before action (skip interest demand) if:
✓ Invoice is over 30 days overdue
✓ The client has ignored all reminders and gone silent
✓ The debt is over £1,000 and you need to escalate formally
✓ You have decided you will not work with this client again
✓ You want to threaten court action to force payment
Tip: One interest demand email is enough. If they ignore it, move to a letter before action. Do not send three interest emails. You lose credibility.
For day-by-day chase email templates and next steps, read our how to chase a late invoice guide.
Common mistakes that weaken your interest claim
Inventing a high interest rate. Do not write "I will charge 25% interest" unless your contract says that and the client agreed. Use the real statutory rate (base + 8%) or keep it generic ("statutory interest as permitted by law").
Charging interest on the first reminder. Too aggressive. Send 1–2 polite reminders first. Statutory interest is for invoices that are persistently late, not invoices that are two days overdue.
Calculating interest from the invoice date instead of the due date. Interest starts the day after the due date, not the invoice date. If your invoice is dated 1 August and due on 15 August (Net 14), interest starts on 16 August, not 2 August.
Not stating a due date on your invoice. If your invoice does not state a due date, the law assumes 30 days, but it is ambiguous and weakens your case. Always state Net 14, Net 30, or a specific date.
Charging interest to consumers (B2C). Statutory interest only applies to B2B and public authority transactions. If your client is an individual buying for personal use, you cannot charge statutory interest under the Late Payment Act. Your contract terms apply instead.
Sending an interest demand and then waiving it. If you say "Pay £1,479 including interest by 17 September or I will escalate," and then they ignore you and you do nothing, you lose credibility. Do not make threats you will not follow through on.
Calculating incorrectly. Double-check your arithmetic. Use a calculator or spreadsheet. If you claim £47 in interest and the client recalculates and gets £39, you look sloppy.
Brief interest calculation example table — quick reference
Here are quick examples for common invoice amounts at 11.75% statutory interest (current rate as of September 2026):
| Invoice amount | Days overdue | Interest (11.75% p.a.) | Debt recovery cost | Total demand |
|---|---|---|---|---|
| £800 | 14 days | £3.60 | £40 | £843.60 |
| £1,200 | 21 days | £8.10 | £70 | £1,278.10 |
| £2,500 | 28 days | £22.47 | £70 | £2,592.47 |
| £5,000 | 35 days | £56.16 | £70 | £5,126.16 |
| £10,000 | 42 days | £135.45 | £100 | £10,235.45 |
Formula: (Invoice amount × 0.1175 × Days overdue) ÷ 365
These numbers assume the base rate is 3.75%. If the base rate changes, recalculate using the new statutory rate.
Related guides
Before you charge interest, you need to have chased politely first. Read our how to chase a late invoice guide for day-by-day email templates and your statutory rights under UK law.
If the interest demand is ignored, the next step is a formal letter before action. Read our letter before action template guide for copy-paste templates, GBP examples, and small claims court next steps.
To stop late payments before they happen, read our guide on invoice payment terms for UK freelancers.
Before you invoice, you need a signed contract with clear payment terms. Read our freelance contract template guide for clause-by-clause wording and late payment clauses.
For a complete UK invoice template with GOV.UK compliance and VAT guidance, see our freelance invoice template guide.
SoloPad helps UK freelancers track unpaid invoices, calculate statutory interest automatically, and generate interest demand emails and letters before action — so you spend less time chasing and more time working. Pricing: Starter £5/month, Solo £12/month, Pro £29/month. Try free for 30 days. Questions? info@solopad.io
Sources and method note
Research, official guidance, and keyword data used while writing this guide:
- GOV.UK — Late commercial payments: charging interest and debt recovery
- Late Payment of Commercial Debts (Interest) Act 1998 — legislation.gov.uk
- Bank of England — Bank Rate (base rate 3.75% as of 10 September 2026)
- Ubersuggest UK keyword data (location ID 2826, 10 September 2026): statutory interest (320/mo, SD 13), late payment interest (480/mo, SD 30), calculate statutory interest (320/mo, SD 41), statutory interest calculator (210/mo, SD 36), statutory interest late payment (110/mo, SD 7), statutory interest rate (170/mo, SD 13), compensation for late payment (90/mo, SD 23)
- Google Trends UK (GB, 12 months to 10 September 2026): statutory interest rising trend (avg index ~16), late payment interest strong but flat/volatile (avg ~44)
Method note: SERP competitors reviewed (not copied): GOV.UK late commercial payments guidance, Small Business Commissioner interest calculator, legislation.gov.uk Late Payment Act 1998, GoCardless (outdated 2021 guide), TinyTax general SMB advice, Garfield Law calculator, Goldsmith Bowers, Equity.org.uk (staging), Xero late payment law overview. Statutory interest calculation examples, invoice notice wording, interest demand email template, contractual vs statutory interest decision tree, and UK freelancer interest-charging guidance are original SoloPad editorial content.
This article is for general education. It is not legal, tax, or accounting advice. Late payment law, statutory interest rates, and debt recovery practices may vary by case, contract, and jurisdiction. When in doubt, consult a solicitor.