Statutory late-payment interest in the UK and the EU, with the sums

A UK developer called Lui Peng went unpaid for over a year. He had been drip-fed down from roughly £2,500 owed to about £1,200 outstanding, and in the end he replaced the client's homepage with a single line: should have paid your website developer, services were delivered. He restored the site when the money arrived, and dropped the court route because the exposure had worked better.

What he could also have done, and what most freelancers on his side of the Atlantic do not know they can do, is send an invoice for interest and a fixed recovery sum that the law had been adding to the debt the whole time. This page is what that law says. It describes the text, with dates and links so you can check it; it is not advice about your situation, the rules are specific to a place, and North is not legal counsel.

The UK: interest at 8% over base under the 1998 Act, plus a fixed sum

The Late Payment of Commercial Debts (Interest) Act 1998 implies a term into business-to-business contracts. Gov.uk's guidance, Late commercial payments: charging interest and debt recovery, states the rate plainly: statutory interest is 8% plus the Bank of England base rate for business to business transactions. The same page gives a worked example: if a business were owed £1,000 and the base rate were 0.5%, the annual statutory interest would be £85, which is 23p a day.

There is one condition worth reading twice. You cannot claim statutory interest if there is a different rate of interest in the contract. So if your terms say one per cent a month and the client is late, you get one per cent a month, not the statutory figure. A contract that stays silent on interest is, in this one respect, better protected than a contract that names a low rate.

When does the clock start? Gov.uk's page on when a payment becomes late says that with no agreed date, the payment is late 30 days after either the customer gets the invoice or you deliver the goods or provide the service, whichever is later. Agreed business-to-business terms are expected to sit within 60 days; a longer period can be agreed, but it must be fair to both businesses. Public authorities are expected to pay within 30 days.

On top of interest there is a fixed sum for the cost of recovering the debt, set by the size of the debt. Gov.uk's page on debt recovery costs lists them:

| Debt | Fixed recovery sum (gov.uk guidance, read 2026) | |---|---| | Up to £999.99 | £40 | | £1,000 to £9,999.99 | £70 | | £10,000 or more | £100 |

The guidance adds two rules that matter in practice. You can only charge the business once for each payment, so the sum is per late invoice and not per reminder. And it sits on top of the interest, not instead of it; reasonable further recovery costs can be claimed as well.

Run Lui Peng's figures through it, as a hypothetical rather than a claim about his case: a £2,500 invoice a year late at a 5% base rate would carry 13% annual interest, or £325, plus the £70 fixed sum for a debt in that band under the 1998 Act. Roughly £395 the client owed on top of the invoice, and never knew about.

The EU: the same shape, by directive

The European Union set the pattern in Directive 2011/7/EU on combating late payment in commercial transactions, which member states had to bring into force by 16 March 2013. Because it is a directive, the actual rule you would rely on is the national law that transposed it, and the exact figures vary a little by country. The floor it sets is this.

Interest: the creditor is entitled to simple interest for late payment at a rate equal to the reference rate (the European Central Bank's rate, in the euro area) plus at least eight percentage points.

Recovery costs: the creditor is entitled to obtain from the debtor, as a minimum, a fixed sum of EUR 40. That is the directive's floor; a member state may set a higher one.

Payment periods: where no date is agreed, interest runs from 30 days after receipt of the invoice. Agreed business-to-business terms must not exceed 60 calendar days unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor. Public authorities are held to 30 days, with limited exceptions.

The plain reading, for a freelancer in Berlin or Lisbon or Dublin: a business client who pays late owes you interest at roughly ECB-plus-eight and at least €40 under the 2011 directive, and an agreed 90-day term is only valid if it was expressly agreed and is not grossly unfair. Check your own country's transposition for the precise numbers before you invoice for them.

The two places this does not reach

Both regimes are about commercial transactions, which means business paying business. A private person commissioning a portrait, a wedding, or a logo for a hobby is generally not a commercial debtor under these rules. If most of your clients are individuals, the statutory interest is not the lever you have; the deposit is.

And the United States has no federal equivalent. There are state prompt-payment statutes, but the ones we could verify are directed at public-sector contracts and construction, not at a designer's invoice to a marketing agency. We could not confirm a general business-to-business late-payment interest rule in any US state, so this page does not claim one. What the US does have, in a handful of jurisdictions, is a different kind of protection: a legal requirement for a written contract with double damages attached, which is its own page.

What to do with it

Put your terms in the contract before the work starts: the payment date, and either your own interest rate or a deliberate silence that leaves the statutory one in place. When an invoice goes late, the first chasing email is a fact-check, not a threat. The second can mention that interest is accruing. If it reaches the third, invoice the interest and the fixed sum as their own line, with the statute named, because a client's accounts department will process a number with a citation on it long before it will process a grievance.

None of this is faster than money already in your account. The deposit still does more work than any clause, and the interest is what you claim when the deposit was not enough.