By Paras Saini & Shubham Sharma ·

How to Write an Overdue Invoice Letter Under UK Law

Less than 10% of UK businesses eligible for statutory interest under the Late Payment of Commercial Debts Act ever claim it — despite the right existing automatically for every B2B invoice, with no late fee clause required. On a £5,000 invoice 60 days overdue, that's approximately £55 in statutory interest plus £70 in fixed recovery costs, available without going to court. These templates are built specifically for UK businesses: they include the correct Late Payment Act references, statutory interest calculations, Letter Before Action wording, and Scotland Simple Procedure guidance.

Key takeaways

  • The Late Payment Act gives UK B2B creditors automatic statutory interest (8% + BoE base rate) from the day after the due date — no prior agreement or late fee clause required
  • Fixed recovery costs are a legal entitlement, not a negotiated fee: £40 for invoices under £1,000, £70 for £1,000–£9,999, £100 for £10,000+
  • An LBA (Letter Before Action) is required before filing in England and Wales small claims — and sends a strong signal that you're serious, which triggers settlement in the majority of cases
  • Small claims limits: £10,000 England & Wales (file at gov.uk/make-court-claim-for-money), £5,000 Scotland (Simple Procedure), £3,000 Northern Ireland
  • Fewer than 10% of eligible UK businesses claim Late Payment Act rights — referencing the Act in your letter immediately establishes that you know your legal position

The Late Payment Act: What It Gives You (That Most Businesses Never Use)

The Late Payment of Commercial Debts (Interest) Act 1998 is one of the most useful but least-used tools available to UK freelancers and small businesses. It gives any business owed money by another business the automatic right to:

  • Charge statutory interest at 8% above the Bank of England base rate, accruing daily from the day after the payment due date
  • Claim fixed recovery costs (£40–£100 depending on invoice size) to compensate for your time chasing payment
  • Claim reasonable additional recovery costs beyond the fixed amounts if your actual costs were higher

Crucially, these rights apply automatically to B2B transactions — you do not need a late fee clause in your contract. The Act does not apply to consumer invoices (B2C). According to BACS Payment Schemes, UK businesses are collectively owed £23.4 billion in late B2B payments — yet fewer than 10% of eligible businesses claim their Late Payment Act rights. GoCardless research found 1 in 6 invoices go unpaid after 90 days, which is precisely why referencing the Act explicitly in your overdue letter matters — it prompts prompt payment from clients who know they are legally exposed.

For a broader view of overdue invoice letters across all stages and US/UK formats, see overdue invoice letter templates (all stages).

What You Can Claim — Amounts & Calculation

Statutory Interest Rate

The statutory rate is 8% above the Bank of England base rate. As of early 2026, with the BoE base rate at 4.5%, the statutory rate is 12.5%. This accrues daily from the day after the original payment due date.

Interest calculation:

(Invoice amount × statutory rate) ÷ 365 × days overdue

Example: £3,000 invoice, 45 days overdue, 12.5% rate:

(£3,000 × 0.125) ÷ 365 × 45 = £46.23

Fixed Recovery Costs

Invoice AmountFixed Recovery Cost
Up to £999.99£40
£1,000 – £9,999.99£70
£10,000 and above£100

Use the late payment penalty calculator to calculate the exact statutory interest for your invoice, then state the precise figure in your letter.

30 Days Overdue — UK Template (Late Payment Act)

↓ Download Letter Template (.txt)Opens in Word, Google Docs, or any text editor

At 30 days, reference the Late Payment Act explicitly. Many clients — especially larger businesses — will process payment immediately when they see statutory interest and fixed recovery costs stated as legal entitlements rather than negotiated charges.

Send by email. Registered post is not required at this stage.

Subject: Invoice #[NUMBER] — 30 Days Overdue | Notice of Statutory Interest Under the Late Payment of Commercial Debts Act 1998 Dear [Client Name], RE: Invoice #[NUMBER] | Amount: £[ORIGINAL AMOUNT] | Due: [ORIGINAL DUE DATE] I am writing to advise that the above invoice is now 30 days overdue. Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to statutory interest on this debt from the day after the original due date. Statutory interest accrued to date: £[CALCULATED AMOUNT] Fixed recovery costs (per the Act): £[40/70/100] Total now outstanding: £[ORIGINAL AMOUNT + INTEREST + RECOVERY COSTS] I would be grateful if you would arrange payment of £[TOTAL] by [DATE — 7 DAYS FROM NOW]. Payment details: Bank: [Bank Name] Sort Code: [XX-XX-XX] Account Number: [XXXXXXXX] Reference: Invoice #[NUMBER] If you have any query about this invoice, please contact me in writing within 5 working days. Kind regards, [Your Name] [Business Name] [Date]

60 Days Overdue — UK Escalation Template

At 60 days, reference your previous contact, state the updated interest and costs, set a firm payment deadline, and signal that a Letter Before Action will follow if payment is not received. Send by email and recorded post.

Subject: Urgent: Invoice #[NUMBER] — 60 Days Overdue | Final Request Before Legal Action Dear [Client Name], RE: Invoice #[NUMBER] | Amount: £[ORIGINAL AMOUNT] | Due: [ORIGINAL DUE DATE] Invoice #[NUMBER] is now 60 days overdue. I contacted you on [PREVIOUS CONTACT DATE(S)] and have received no payment or substantive response. Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to: Statutory interest (60 days): £[CALCULATED AMOUNT] Fixed recovery costs: £[40/70/100] Total outstanding: £[TOTAL] Please arrange payment of £[TOTAL] by [DATE — 14 DAYS FROM NOW]. Payment details: Bank: [Bank Name] Sort Code: [XX-XX-XX] Account Number: [XXXXXXXX] Reference: Invoice #[NUMBER] If this invoice is in dispute, you must contact me in writing by [DATE] to resolve the matter. If I do not receive payment or a written response by [DATE], I will issue a formal Letter Before Action (LBA) as a precursor to filing a claim in the County Court / Small Claims Court. Regards, [Your Name] [Business Name] [Address] [Date] Sent by: Email and Recorded Post

Letter Before Action (LBA) Template — England & Wales

A Letter Before Action (LBA) is the formal final step before filing a court claim in England and Wales. Courts require that a claimant has given the defendant a reasonable opportunity to settle before proceedings are issued. The LBA formally provides that opportunity and creates a clear paper trail. Give 14 days for a response.

Send by email AND recorded/signed-for post. Keep the Royal Mail tracking receipt — it is evidence of delivery if the debtor later claims they never received it.

[YOUR NAME / BUSINESS NAME] [YOUR ADDRESS] [DATE] [CLIENT NAME] [CLIENT ADDRESS] BY RECORDED POST AND EMAIL RE: LETTER BEFORE ACTION — Invoice #[NUMBER] — £[TOTAL OUTSTANDING] Dear [Client Name], I write in connection with Invoice #[NUMBER] dated [INVOICE DATE] for £[ORIGINAL AMOUNT], due for payment on [DUE DATE]. This invoice remains unpaid despite written requests on [LIST OF PREVIOUS CONTACT DATES]. Total amount now outstanding: Original invoice: £[AMOUNT] Statutory interest ([DAYS] days at [RATE]%): £[INTEREST AMOUNT] Fixed recovery costs (Late Payment of Commercial Debts Act 1998): £[40/70/100] TOTAL: £[TOTAL] I hereby give you notice that unless the sum of £[TOTAL] is received in full by [DATE — 14 DAYS FROM TODAY], I will commence proceedings in the County Court / Small Claims Court without further notice. A copy of this letter and all prior correspondence will be filed with the court as evidence of your failure to respond. If you wish to dispute any element of this invoice, you must contact me in writing within 14 days. Failure to do so will be taken as acceptance of the debt. Yours sincerely, [Your Name] [Your Business Name] [Your Address] [Phone / Email]

After 14 days with no payment or response, file your claim at Money Claim Online. For amounts under £10,000, the Small Claims Track is straightforward and does not require a solicitor.

Scotland: Simple Procedure Template

In Scotland, small claims up to £5,000 are handled under the Simple Procedure through the Scottish Courts and Tribunals Service. The process is different from England and Wales — you file at your local Sheriff Court, not online through MCOL. The equivalent of an LBA in Scotland is a Formal Demand.

Subject: FORMAL DEMAND — Invoice #[NUMBER] — £[TOTAL] — Payment Required by [DATE] Dear [Client Name], I am writing to formally demand payment of Invoice #[NUMBER] for £[ORIGINAL AMOUNT], due on [DATE] and now [X] days overdue. Under the Late Payment of Commercial Debts (Interest) Act 1998, I am entitled to statutory interest of £[AMOUNT] and fixed recovery costs of £[40/70/100], bringing the total outstanding to £[TOTAL]. Previous correspondence was sent on [DATES]. Unless payment of £[TOTAL] is received by [DATE — 14 DAYS], I will raise a claim under the Simple Procedure at [LOCAL SHERIFF COURT] without further notice. Payment details: Bank: [Bank Name] Sort Code: [XX-XX-XX] Account Number: [XXXXXXXX] Reference: Invoice #[NUMBER] Yours sincerely, [Your Name] [Business Name] [Address] [Date]

Scotland note: Claims up to £5,000 use Simple Procedure. Claims between £5,000 and £100,000 use the Ordinary Cause procedure. For claims over £100,000 you need a solicitor. Northern Ireland small claims limit is £3,000, filed through the NI Courts and Tribunals Service.

UK-Specific Subject Lines

Before LBA

  • "Invoice #[NUM] — [X] Days Overdue | Statutory Interest Now Accruing Under Late Payment Act"
  • "Overdue Invoice #[NUM] — £[AMOUNT] | Notice Under Late Payment of Commercial Debts Act 1998"
  • "Payment Required: Invoice #[NUM] — £[TOTAL] Including Statutory Interest"

Letter Before Action

  • "LETTER BEFORE ACTION — Invoice #[NUM] — £[TOTAL] — [14 Days to Respond]"
  • "Notice of Intended Legal Proceedings — Invoice #[NUM] | [Business Name]"
  • "Final Notice Before County Court Claim — Invoice #[NUM]"

Scotland Formal Demand

  • "FORMAL DEMAND — Invoice #[NUM] — £[TOTAL] — Simple Procedure Notice"
  • "Final Payment Demand Before Simple Procedure Claim — Invoice #[NUM]"

For a full UK and US subject line library, see 25 polite payment reminder subject lines. To track every letter sent and when, use InvoiceGrid — the chase history log timestamps every follow-up per invoice, which is exactly what a court needs to see.

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Frequently Asked Questions

What is the Late Payment of Commercial Debts (Interest) Act 1998?+

The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses the automatic right to charge statutory interest (8% above the Bank of England base rate) and fixed recovery costs (£40–£100 depending on invoice size) on overdue B2B invoices — without needing a late fee clause in your original contract. It applies from the day after the payment due date.

How do I calculate statutory interest on a UK overdue invoice?+

Statutory interest = (Outstanding amount × (0.08 + current BoE base rate)) ÷ 365 × number of days overdue. For example, on a £2,000 invoice at 8.25% (0.08 + 0.0025 base rate): (£2,000 × 0.0825) ÷ 365 × 30 days = £13.56 for 30 days overdue. Update the BoE base rate from the Bank of England website.

What fixed recovery costs can I claim under the Late Payment Act?+

The Late Payment Act entitles you to: £40 for invoices up to £999.99, £70 for invoices between £1,000 and £9,999.99, and £100 for invoices of £10,000 and above. These costs are claimed in addition to the outstanding invoice amount and any statutory interest.

What is a Letter Before Action (LBA) and when should I send one?+

A Letter Before Action (LBA) is a formal notice to a debtor that you intend to commence legal proceedings if payment is not made. In England and Wales, courts expect an LBA to have been sent before a claim is filed — it demonstrates you gave the other party a final opportunity to pay. Send the LBA after all other reminders have been ignored, typically at 60–90 days overdue, and give the recipient 14 days to respond.

What is the small claims limit in England and Wales vs Scotland?+

In England and Wales, the Small Claims Track handles claims up to £10,000. Claims are filed through the Money Claim Online (MCOL) service at gov.uk/make-court-claim-for-money. In Scotland, the Simple Procedure handles claims up to £5,000, filed through the Scottish Courts and Tribunals Service. Northern Ireland uses the Small Claims Court for claims up to £3,000.

Do I need to include a late fee clause in my UK contract to claim statutory interest?+

No. Statutory interest under the Late Payment of Commercial Debts Act applies automatically to B2B transactions — you do not need a late fee clause in your contract. However, if your contract specifies a different (higher) interest rate, you can claim that instead of the statutory rate if it constitutes a 'substantial remedy' for the debtor's late payment.

Does the Late Payment Act apply to invoices to consumers (B2C)?+

No. The Late Payment of Commercial Debts Act applies only to commercial transactions between businesses (B2B). It does not apply to invoices issued to individual consumers. For consumer debt recovery, you would rely on your contract terms and general contract law.