The Commercial Payments Bill: What It Would Change for UK Freelancers

A new bill working its way through Parliament would shake up how UK freelancers get paid, making interest on late invoices mandatory, capping payment terms at 60 days, and giving clients a hard deadline to raise a genuine dispute.

It is not law yet. The Commercial Payments Bill still has several parliamentary stages left to clear, so this guide sets out exactly what it proposes, what stage it's at right now, and what you can already do under the law that applies today.

Numbers like these are why the Bill exists. For the full, sourced picture of the scale of UK late payment, see our UK late payment statistics reference.

1. What the Commercial Payments Bill is

The Commercial Payments Bill is a government bill introduced in the House of Lords to tackle late payment between businesses, an issue that disproportionately affects freelancers and small suppliers dealing with larger clients.

It would amend the existing statutory interest regime, introduce a cap on payment terms, set a firm deadline for raising invoice disputes, and hand the Small Business Commissioner stronger powers to act against persistent late payers.

Most of the individual mechanisms it proposes, statutory interest, compensation, payment terms, already exist in some form under current law. What the Bill would change is how automatic and enforceable they are.

The Bill is a government bill rather than a private member's bill, which generally means it has a realistic chance of becoming law if parliamentary time allows, but that is not a guarantee and the timetable can still slip. It began in the House of Lords, so it will also need to pass through the House of Commons before it can receive Royal Assent.

It sits alongside a wider government push on late payment, including the Small Business Commissioner's own late payment research and an earlier consultation on tackling poor payment practices. The Bill is the legislative vehicle for turning that policy direction into enforceable rules, rather than a standalone idea.

2. The four changes that matter to freelancers

Four proposals in the Bill directly affect how and when a freelancer gets paid. Here's how each compares with the rules that apply right now.

3. What mandatory interest would actually mean for you

This is the change with the biggest practical impact. Under the 1998 Act as it stands today, you are already entitled to charge statutory interest on a late business invoice, currently 11.75% a year (the Bank of England base rate of 3.75%, checked 5 July 2026, plus the fixed 8% set by the Act), plus fixed compensation on top.

In practice, many freelancers never claim it, often out of a very reasonable worry that adding interest to an invoice will sour a client relationship they want to keep. Making interest mandatory would remove that awkward decision entirely. It stops being something you choose to invoke and becomes a default part of what's owed, in the same way VAT or a late fee on a household bill isn't up for individual negotiation.

That matters because the current opt-in system quietly works against the freelancers who most need the money. Someone with more work than they can handle can afford to charge interest and risk the relationship. Someone chasing a single overdue invoice from a client they hope to work with again often can't, which is exactly why so many freelancers are owed money they're legally entitled to but never claim. A mandatory system removes that judgement call from the freelancer entirely and puts it on the client instead.

For the full detail on the current rate, compensation bands, and how to word it, see our guides to statutory interest and compensation and how to actually charge interest on an overdue invoice, or work out the exact figure for a specific invoice with our free late payment interest calculator.

4. The 30-day dispute deadline

A second proposal directly targets a tactic that frustrates a lot of freelancers: a client sitting on an invoice for weeks, then suddenly raising a dispute only once you've escalated to a final demand or letter before action.

The Bill would give a client 30 days from receiving an invoice to raise a genuine dispute. Miss that window, and compensation would become payable to the freelancer, making it harder to use a late, convenient dispute purely as a stalling tactic.

The distinction the Bill is trying to draw is between a genuine dispute, raised promptly, over specific work, and a dispute raised weeks or months later as a reason to keep an invoice unpaid a little longer. Under current rules there's no fixed point at which a late dispute stops being credible, which is exactly what makes it such a useful stalling tactic for a client who wants to.

If you're dealing with a dispute right now, under current rules rather than proposed ones, our guide on what to do when a client disputes your invoice covers how to tell a genuine dispute from a stalling tactic and how to respond.

5. What you can already do today

None of the above is in force. The good news is that current law already gives you more leverage than most freelancers use.

The Late Payment of Commercial Debts (Interest) Act 1998 already lets you charge statutory interest and fixed compensation on a qualifying business debt, right now, without waiting for any Bill to pass. Combined with a proper chase sequence and, where needed, a formal letter before action, it's a genuinely usable set of rights that most freelancers simply don't exercise.

Start with our complete guide to chasing an unpaid invoice in the UK, then use our interest and compensation guide and interest calculator to work out exactly what's owed. If a chase has stalled, our letter before action guide sets out exactly what a formal letter needs to include before you consider court.

If it still doesn't get paid, our small claims court guide covers the Money Claim Online process and current court fees. And if your client is a sole trader or an individual rather than a limited company, the pre-action rules differ, our guide to chasing a sole trader or individual sets out exactly how.

6. How to prepare

Whatever stage the Bill reaches, the habits it's designed to encourage are worth building now rather than waiting for them to become mandatory.

Set tighter payment terms on new contracts rather than defaulting to whatever a client proposes, and put it in writing before the work starts rather than after. A 30-day term agreed up front is far easier to enforce than trying to argue for one after an invoice has already gone out.

Track due dates so a late payment gets flagged the moment it happens rather than weeks later, once it's harder to chase and easier for a client to claim they simply forgot. Accounting software such as Sage^(affiliate) does exactly this automatically, tracking invoice due dates and flagging lateness without you having to check manually, which matters most in the exact weeks when you're busy with paid work and least likely to notice an invoice has slipped past its due date.

If a client repeatedly pushes payment terms beyond what's reasonable, our guide to chasing invoices without damaging the relationship covers how to raise it without souring the work itself.

7. FAQ