In a major change for the UK’s freelance workforce, the government has unveiled a bold new Small Business Strategy today that tackles one of the most persistent threats to self-employed livelihoods: late payment.

This isn’t just a welcome surprise; it reflects the collective efforts of IPSE and other organisations that have long campaigned for change.

In our 2024 Manifesto, we called for a statutory cap on payment terms of 60 days and enhanced enforcement powers for the Small Business Commissioner. Today’s announcement delivers on both, marking a significant step forward for the self-employed. 

With the average amount owed to freelancers in overdue invoices standing at £5,230, this is far more than a minor inconvenience. For many, that amount represents two full months of income, sometimes even more. 

Unlike larger firms, freelancers don’t have the luxury of waiting months to be paid. When invoices remain unpaid, it’s livelihoods, rent, bills, and the ability to continue trading that all suffer.

At the heart of the announcement is a legal cap on payment terms: 60 days will become the absolute maximum time a client can take to pay an invoice. 

Crucially, this is not a soft target or a guideline; it is a firm legal limit. And it’s set to fall further to 45 days in the coming years (to be confirmed following another consultation).

Another key reform is the introduction of automatic interest on overdue payments. 

While freelancers are already entitled to charge interest, many are reluctant to do so for fear of damaging client relationships or losing future work. 

Under the new rules, interest will be applied automatically when payments are late. In addition, large companies will be required to report how much interest they’ve paid or accrued.

The government also plans to expand the powers of the Small Business Commissioner (SBC), allowing the office to investigate repeat offenders and issue fines without needing a formal complaint.

IPSE has worked closely with the Commissioner in recent years to highlight the damage caused by late payment. We’ve consistently called for stronger enforcement tools, and this change is a welcome step forward. 

It means the SBC can now act on patterns in the payment reporting data, rather than relying on individual freelancers to come forward – something many are understandably hesitant to do.

While this may not be the most high-profile reform, it’s impact on repeat offenders could be significant.

These reforms mark a major shift in the campaign for fair payment terms for freelancers. By introducing legal limits, mandatory interest, and stronger enforcement, the government is finally recognising the scale of the problem and the need for action. 

This should act as a strong deterrent to repeat offenders, both financially and reputationally. It also gives freelancers more confidence that the system is on their side, especially when dealing with larger clients. 

For IPSE members and the wider self-employed community, this is a moment to celebrate and a clear demonstration of the impact that coordinated, evidence-based campaigning can have.