What is construction retention?

Retention is a percentage (typically 3-5%) deducted from each interim payment and held by the client as security against defects. It provides an incentive for the contractor to return and fix any issues that arise after handover.

When is retention released?

Typically, half (2.5% of contract value if 5% retention) is released at practical completion when the project is handed over. The remaining half is released at the end of the defects liability period, usually 12 months after practical completion.

Is 5% retention standard?

Yes, 5% is the most common retention rate in UK construction contracts (JCT and NEC). Some contracts use 3%. The Construction Act and case law mean retention must be held in trust in some circumstances, though enforcement varies.

Can I negotiate lower retention?

Yes, particularly if you have a strong track record, quality accreditations, or offer a retention bond (insurance guarantee) instead. Some progressive clients agree to zero retention with a bond. Always negotiate before signing the contract.

What happens if retention is not released?

If the client fails to release retention when due, you have a statutory right to payment under the Construction Act 1996. Issue a notice, then adjudicate if necessary. Many specialist lawyers handle retention disputes and offer no-win-no-fee arrangements.

TradeCalculator

Retention Calculator

Calculate construction retention amounts and release schedule

Contract Value

Retention Rate

Defects Period

How We Calculate This

Enter the total contract value and retention percentage (typically 5%). The calculator determines the total retention amount, how much is deducted per interim valuation, the release at practical completion (usually 50% of retention), and the release at the end of the defects period. This helps plan cash flow and understand the true cost of retention on your working capital.

Frequently Asked Questions

Related Calculators

Day Rate Calculator

Calculate net income from day rate after NI, income tax, pension and insurance.

Hourly Rate Calculator

Calculate hourly rate from target income, overheads, profit margin and billable hours.

Job Pricing Calculator

Calculate job price from materials, labour, waste, travel, markup and VAT.

Profit Margin vs Markup Calculator

Convert between profit margin and markup percentages with worked examples.

Mileage Cost Calculator

Calculate mileage costs at HMRC rates vs actual vehicle running costs.

Last updated: March 2026

All calculations are estimates. Verify with your supplier.