How to chase an unpaid invoice in the UK

GuideUKChecked 29 October 202618 primary sources8 min readUS version

The short answer

In the UK, chase in steps: a reminder, a firm deadline, a letter before action, then a court claim. If the customer is a business, add statutory interest (11.75% a year where interest starts to run July to December 2026, As of Oct 2026) and £40 to £100 fixed compensation per invoice.

What is the right order for chasing an unpaid invoice?

Start polite and get firmer, in writing, one step at a time: the written trail is what a court will want to see.

  1. Invoice the day you finish, with the due date and your payment terms. Put the terms on the quote too (see how to price a quote).
  2. A plain reminder when it falls due. Assume an oversight.
  3. A firm reminder about a week later, with a specific date and what happens after it. If the customer is a business, say that statutory interest and compensation now apply.
  4. A letter before action, giving the time to reply the court rules expect.
  5. A court claim, if they neither pay nor reply.

Log every call and answer any complaint in writing.

Can I charge interest on a late invoice?

Yes, if your customer is a business. The Late Payment of Commercial Debts (Interest) Act 1998 implies a right to simple interest into business-to-business contracts for goods or services, across the UK, unless the contract gives a "substantial remedy" of its own. A term that removes the right without one is void (ss.1, 2, 8 and 9).

  • The rate: 8% a year above the Bank of England reference rate, fixed for that debt. The reference rate is Bank Rate on 30 June for interest that starts to run July to December, and on 31 December for January to June (SI 2002/1675, art 4). Bank Rate was 3.75% on 30 June 2026, so that interest runs at 11.75%. As of Oct 2026.
  • From when: the day after the agreed payment date or, with none agreed, 30 days after the later of doing the work and the customer receiving notice of the debt (s.4).
  • Fixed compensation per invoice: £40 under £1,000, £70 from £1,000 to £9,999.99, £100 from £10,000, plus reasonable recovery costs above that (s.5A). As of Oct 2026.
£4,800 business invoice paid 60 days late in October 2026 (indicative, As of Oct 2026)Amount
Interest: £4,800 x 11.75% x 60 / 365£92.71
Compensation, debt of £1,000 to £9,999.99£70.00
Added to the debt£162.71

The Small Business Commissioner takes complaints from businesses with fewer than 50 staff paid late by larger ones (Enterprise Act 2016 s.2). The Commercial Payments Bill [HL], which would change these rules, has passed the Lords but not received Royal Assent. As of Oct 2026.

What if my customer is a homeowner?

There is no statutory interest or compensation, because the Late Payment Act never applies to a consumer. Claim interest at your contract rate if your terms set one.

If they do not, ask the court for simple interest on your money claim. In England and Wales that is at the court's discretion (County Courts Act 1984 s.69), and HMCTS says the rate is usually 8% a year. As of Oct 2026.

What goes in a letter before action?

The debt, the evidence and a fair deadline to pay or reply. Going to court without one can cost you, even if you win.

  • Against an individual or sole trader (England and Wales): follow the Pre-Action Protocol for Debt Claims. Send a letter of claim with the Protocol's reply form and allow 30 days (paras 1.1, 3.1 and 3.4).
  • Against a company (England and Wales): the Practice Direction on Pre-Action Conduct applies. Allow a reasonable time to reply, 14 days in a straightforward case (para 6).

Give the amount, invoice number and date, the work, the interest and compensation and how you worked them out, the pay-by date and your next step. Keep proof you sent it.

How do I take an unpaid invoice to court?

In England and Wales, issue a money claim, which you can do online. Claims up to £10,000 normally go to the small claims track, where you do not need a solicitor and each side mostly pays its own costs (CPR r.26.9, As of Oct 2026).

An unpaid statutory demand can found a bankruptcy petition for a debt of £5,000 or more, or a winding-up petition against a company owing more than £750 (Insolvency Act 1986 ss.267 and 123, As of Oct 2026). Never use one for a debt the customer genuinely disputes. See a solicitor before using one, or before suing above the small claims limit.

Is it different in Scotland or Northern Ireland?

Statutory interest and compensation apply UK-wide, but the courts differ. The Pre-Action Protocol and s.69 above are England and Wales rules.

  • Scotland: simple procedure in the sheriff court for claims up to £5,000 (Courts Reform (Scotland) Act 2014 s.72(3)). As of Oct 2026.
  • Northern Ireland: small claims in the county court up to £5,000 (County Courts (Financial Limits) Order (Northern Ireland) 2022). As of Oct 2026.

Do construction payments follow different rules?

Yes, on business construction contracts. Part II of the Housing Grants, Construction and Regeneration Act 1996 sets a notice timetable in England, Wales and Scotland (Northern Ireland has its own 1997 Order), but not for a homeowner's own home (s.106).

  • A payment notice within 5 days after the due date (s.110A). To pay less, a pay less notice before the final date, 7 days before it by default under the Scheme for Construction Contracts (s.111); without one, the notified sum is due.
  • Unpaid by the final date, you can suspend work after at least 7 days' notice (s.112).
  • Adjudication at any time, decided 28 days after referral, extendable (s.108). Pay-when-paid is ineffective unless someone up the chain is insolvent (s.113). As of Oct 2026.

See a solicitor before you suspend work or adjudicate. Lesson: a deduction made without a proper notice.

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Questions owners ask

How much interest can I charge on a late invoice in the UK?

On a business debt, 8% a year above the Bank of England reference rate, so 11.75% simple where interest starts to run July to December 2026, plus £40, £70 or £100 per invoice (Late Payment of Commercial Debts (Interest) Act 1998, s.5A). As of Oct 2026.

Can I charge late payment interest to a homeowner?

Not under the Late Payment Act, which covers only business contracts. Use your terms' rate, or ask the court, which in England and Wales has discretion (County Courts Act 1984 s.69); the usual rate claimed is 8% a year. As of Oct 2026.

How long must I wait after a letter before action?

In England and Wales, 30 days for an individual or sole trader under the Pre-Action Protocol for Debt Claims. For a company, a reasonable time, which the Practice Direction on Pre-Action Conduct puts at 14 days in a straightforward case (para 6).

What is the small claims limit in the UK?

£10,000 in England and Wales, £5,000 under simple procedure in Scotland, and £5,000 in Northern Ireland. As of Oct 2026.

How old can an unpaid invoice be before it is too late?

Generally 6 years for a contract claim in England and Wales (Limitation Act 1980 s.5) and Northern Ireland (Limitation (Northern Ireland) Order 1989 art 4), and 5 years in Scotland (Prescription and Limitation (Scotland) Act 1973 s.6).

Sources

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