Letter Before Action: What to Include and How to Write One in England and Wales

A Letter Before Action is a formal notice sent before starting court proceedings.

It explains what is owed, why it is owed and what you intend to do if the matter is not resolved. A clear, well-drafted letter may help recover payment without the need to issue a court claim.

The guidance below applies to England and Wales. Scotland and Northern Ireland have different court procedures.

Lowdown

Before starting court proceedings, the parties are generally expected to exchange sufficient information to understand the dispute and consider whether it can be resolved without litigation. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

A Letter Before Action is also commonly known as a:

• Letter Before Claim;
• Letter of Claim; or
• Final Demand.

The exact requirements depend on who owes the money.

If a business is claiming a debt from an individual or sole trader, the Pre-Action Protocol for Debt Claims will usually apply. That protocol contains additional requirements, including a longer response period and specific documents that must accompany the letter. (Civil Procedure Rules – Pre-Action Protocol for Debt Claims)

Different pre-action requirements generally apply where the debtor is a limited company or another business organisation.

What a Letter Before Action Should Include

1. The Amount Claimed

State the total amount you believe is owed.

Break the figure down clearly into:

• the original debt;
• interest;
• fixed debt recovery compensation (where applicable); and
• any other amount you believe you are entitled to recover.

Showing the calculation makes it easier for the recipient to understand and respond to the claim.

2. What the Debt Relates To

Identify the transaction clearly.

Include relevant details such as:

• invoice numbers;
• invoice dates;
• the work, goods or services supplied;
• the agreed price;
• the payment terms; and
• the date payment became due.

Attach copies of invoices or other relevant documents where appropriate.

3. How the Debt Arose

Provide a short, factual explanation of what happened.

Explain:

• when the agreement was made;
• what each party agreed to do;
• what you supplied;
• when payment became due; and
• what remains unpaid.

Keep the explanation neutral, factual and chronological. Avoid emotional language or personal criticism.

4. Any Interest and Recovery Costs

Explain whether you are claiming interest and how it has been calculated.

For qualifying commercial debts and where a contract does not state a different rate of interest or provide a substantial contract remedy, statutory interest is generally available under the Late Payment of Commercial Debts (Interest) Act 1998 at 8 percentage points above the Bank of England base rate. (Late Payment of Commercial Debts (Interest) Act 1998; GOV.UK – Charging interest and debt recovery)

For qualifying commercial debts, you may also be entitled to claim fixed debt recovery compensation:

DebtFixed CompensationUp to £999.99£40£1,000–£9,999.99£70£10,000 or more£100

The fixed compensation can generally be claimed once for each qualifying late payment. (Late Payment of Commercial Debts (Interest) Act 1998)

State:

• the interest rate;
• the period over which interest has been calculated;
• the amount of interest outstanding on the date of the letter; and
• whether interest will continue to accrue.

5. A Clear Response Deadline

The appropriate deadline depends on the nature of the claim and who owes the money.

For a straightforward claim where no specific pre-action protocol applies, allowing at least 14 days for a response will often be reasonable, although more complex disputes may justify a longer period. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

If a business is claiming payment from an individual or sole trader, the Pre-Action Protocol for Debt Claims normally requires the Letter of Claim to allow at least 30 days from the date of the letter for a response. (Civil Procedure Rules – Pre-Action Protocol for Debt Claims)

Avoid setting an unnecessarily short deadline. The court may consider whether the parties have complied with the relevant pre-action rules when making decisions about case management and costs.

6. What You Will Do Next

Explain clearly what will happen if payment is not received or the dispute is not resolved.

For example:

If I do not receive payment or a satisfactory response by [date], I intend to commence court proceedings without further notice.

You may also state that you intend to claim:

• the outstanding debt;
• statutory or contractual interest;
• any applicable debt recovery compensation;
• the court issue fee; and
• any other sums the court considers recoverable.

Only threaten legal action that you genuinely intend to pursue.

7. How Payment Can Be Made

Provide clear payment instructions.

For example:

• account name;
• sort code;
• account number;
• payment reference; and
• any alternative payment methods.

Also explain who the recipient should contact if they wish to discuss the debt or propose a repayment arrangement.

8. Keep Evidence That the Letter Was Sent

Keep a copy of the Letter Before Action together with evidence showing when and how it was sent.

Depending on the circumstances, this might include:

• proof of posting;
• recorded delivery;
• courier confirmation;
• email delivery confirmation; or
• read receipts where appropriate.

If court proceedings become necessary, evidence that the letter was sent may help demonstrate compliance with the pre-action process. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

Extra Rules When Claiming From an Individual or Sole Trader

Where a business is claiming payment from an individual or sole trader, the Pre-Action Protocol for Debt Claims will usually apply.

The Letter of Claim should normally include:

• the amount of the debt;
• details of any interest or charges;
• details of the agreement;
• details of any assignment (if applicable);
• information explaining how payment can be made; and
• information about discussing payment options. (Civil Procedure Rules – Pre-Action Protocol for Debt Claims)

You will also normally need to enclose:

• an up-to-date statement of account (or equivalent);
• the Protocol Information Sheet;
• the Reply Form; and
• the Financial Statement form.

The debtor should usually be allowed at least 30 days to respond.

If the debtor requests documents, states they are obtaining debt advice or proposes a repayment arrangement, additional time may need to be allowed before proceedings are started. (Civil Procedure Rules – Pre-Action Protocol for Debt Claims)

Common Mistakes

Setting the Deadline Too Short

Seven days is often unlikely to be reasonable.

Where no specific protocol applies, allowing around 14 days will often be appropriate. Claims covered by the Debt Claims Protocol will usually require 30 days.

Using Aggressive Language

The letter may later be read by the court.

Keep it factual, professional and focused on resolving the dispute.

Claiming Interest Without Explaining the Calculation

Do not simply add interest to the total.

Explain the legal or contractual basis for the claim, the interest rate applied and how the amount has been calculated.

Failing to Identify the Invoices

List the relevant invoice numbers, dates and amounts.

The recipient should be able to identify exactly what is being claimed.

Ignoring a Genuine Response

A Letter Before Action forms part of the pre-action process.

If the recipient raises a genuine issue, requests relevant documents or makes a reasonable repayment proposal, consider and respond before issuing proceedings.

Threatening Action You Do Not Intend to Take

Only threaten legal proceedings if you genuinely intend to issue a claim should the dispute remain unresolved.

Sending the Wrong Documents

If the Debt Claims Protocol applies, failing to include the required forms and information may delay any subsequent court proceedings.

Does Sending a Letter Stop the Limitation Period?

No.

Sending a Letter Before Action does not usually stop the legal time limit for bringing a claim.

For most simple contract debts, court proceedings must generally be started within six years from the date the cause of action accrued. The applicable limitation period depends on the facts of the case, including the agreement, the payment terms and any later events. (Limitation Act 1980, s.5)

If you believe the limitation period may be close to expiring, seek legal advice promptly.

Our Conclusion

A well-drafted Letter Before Action should explain:

1. what is owed;
2. why it is owed;
3. how the amount has been calculated;
4. when a response is required; and
5. what will happen if the dispute is not resolved.

Use a professional tone, provide the relevant supporting documents and allow an appropriate response period.

Where the debtor is an individual or sole trader, check carefully whether the Pre-Action Protocol for Debt Claims applies before sending the letter. Following the correct pre-action procedure may improve the prospects of resolving the dispute without court proceedings and helps demonstrate compliance if a claim later becomes necessary. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols; Pre-Action Protocol for Debt Claims)

Sources

• GOV.UK, Make a court claim for money — https://www.gov.uk/make-court-claim-for-money
• GOV.UK, Late commercial payments: charging interest and debt recovery — https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
• GOV.UK, Claim debt recovery costs on late payments — https://www.gov.uk/late-commercial-payments-interest-debt-recovery/claim-debt-recovery-costs
• Civil Procedure Rules, Practice Direction – Pre-Action Conduct and Protocols — https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct
• Civil Procedure Rules, Pre-Action Protocol for Debt Claims — https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_debt
• Late Payment of Commercial Debts (Interest) Act 1998 — https://www.legislation.gov.uk/ukpga/1998/20/contents
• Limitation Act 1980, section 5 — https://www.legislation.gov.uk/ukpga/1980/58/section/5