What is a letter before action?

A letter before action (LBA) is a formal notice sent before starting court proceedings. It sets out your claim, the legal basis (e.g. Consumer Rights Act 2015, Housing Act 1988), the remedy you seek, and a deadline to respond — typically 14 days. Civil Procedure Rules require this step before most court claims, and courts take a dim view of parties who skip it.

Can I write my own legal letter?

Yes. You do not need a solicitor to write a legal letter. What matters is citing the correct legislation, stating your claim with precise dates and amounts, and giving a clear deadline. A well-drafted letter citing the right Act and section often resolves disputes without court proceedings — and costs nothing extra to send.

Does a legal letter actually work?

In many cases, yes. Most businesses, landlords, and employers respond when they receive a formally worded letter that cites specific legislation and mentions court or tribunal proceedings as the next step. It signals you know your rights and are prepared to escalate — which is often enough to get a resolution.

What UK legislation covers consumer complaints and refunds?

The Consumer Rights Act 2015 is the primary law. Section 9 requires goods to be of satisfactory quality; section 20 gives you the right to a full refund within 30 days if goods are faulty. For services, section 49 requires reasonable care and skill. For distance/online purchases, the Consumer Contracts Regulations 2013 give you a 14-day cooling-off period.

3 July 2026

How to Chase an Unpaid Invoice: Your Legal Right to Interest — and the Demand Letter That Gets You Paid

Few things drain a small business or freelancer like an invoice that simply never gets paid. You did the work, you sent the bill, and now the emails go unanswered. The good news: if the debt is owed by another business, UK law gives you a genuine set of teeth — the right to charge interest, claim fixed compensation, and reclaim your reasonable recovery costs. Most people never use these rights because they do not know they exist. Here is how they work, and how to put a debtor on notice in writing.

Your Statutory Right to Interest

The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses an automatic right to claim interest when another business pays a commercial (B2B) debt late. You do not need a clause in your contract — the right applies by default unless a contract provides a substantial alternative remedy.

The statutory rate is 8% plus the Bank of England base rate, calculated on the overdue amount from the day the payment became late until the day it is paid. One technical point worth getting right: for statutory interest, the base rate used is the one in force on 30 June (for debts becoming late between 1 July and 31 December) or 31 December (for the following half-year) — not necessarily the rate on the day you send your letter. Set out the formula ("8% above the Bank of England base rate") and the reference base rate you have applied so your calculation is transparent.

Fixed Compensation — On Top of Interest

The same Act lets you claim a fixed sum for the trouble of chasing the debt, in addition to interest. The amount depends on the size of the debt:

£40 for a debt of less than £1,000
£70 for a debt of £1,000 up to £9,999.99
£100 for a debt of £10,000 or more

If your reasonable costs of recovering the debt (for example, using a debt-recovery service) exceed the fixed sum, you can claim the difference too.

When Is a Payment Actually "Late"?

If you agreed payment terms with the customer, the debt is late once that deadline passes. If you did not agree any terms, the law sets a default: payment is late 30 days after the customer receives the invoice, or after the goods or service are delivered — whichever is later.

For B2B contracts, agreed payment terms should not normally exceed 60 days unless both sides expressly agree a longer period and it is fair to both businesses.

Before You Send: Get Your Position Straight

Confirm the debt is undisputed. Interest and compensation apply to money genuinely owed. If the customer has raised a real complaint about the work, deal with that first.
Gather your paper trail — the invoice, the contract or agreed terms, delivery confirmation, and any reminder emails.
Work out the numbers — the principal owed, the interest formula, and the fixed compensation band that applies.

What Your Demand Letter Should Say

A firm, professional letter often gets a result on its own — many businesses pay the moment they realise you know your rights and intend to enforce them. Your letter should:

Identify the debt — invoice number, date, amount, and what it was for.
State that payment is overdue and by how long.
Assert your statutory rights — interest at 8% above the Bank of England base rate and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
Give a clear figure and a clear deadline — commonly 7 to 14 days to pay in full.
State what happens next — a formal letter before action and, if necessary, a claim in the County Court (small claims track for debts up to £10,000).
Send it so you can prove delivery and keep a copy of everything.

The Law Is About to Get Tougher

Late payment is high on the government's agenda. In its response to the Time to Pay Up consultation (published March 2026), the government set out plans it described as the toughest crackdown on late payments in over 25 years — including a hard maximum payment term for large firms paying smaller suppliers, statutory interest that businesses cannot contract out of, and stronger powers for the Small Business Commissioner. Important: as of mid-2026 these reforms are not yet law — they still require legislation. The rules that apply today are those set out above under the 1998 Act. Worth knowing which way the wind is blowing, but do not cite the incoming reforms as if they are already in force.

If They Still Do Not Pay

If your deadline passes, the next step is a formal letter before action — the mandatory pre-action step before a court claim. For debts up to £10,000, you can then file a claim on the small claims track at gov.uk/make-court-claim-for-money. Steady, documented pressure — an invoice, a demand, a letter before action — is what moves a reluctant payer.

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