Get your retention released: the two dates that decide when you see it

You finished the groundworks in March, the building reached practical completion in September, and 5% of everything you invoiced is still sitting with the main contractor. Half of it should have come back at practical completion and the other half twelve months after that, except no certificate has arrived, nothing has been said about which of the two release events has happened, and the last email went unanswered.

Retention is the UK's version of a holdback, and it is the money small firms lose quietly. There is no statute that sets the percentage, no lien to register and no statutory trust that catches it if the payer goes under. What there is instead is the payment notice machinery of the Housing Grants, Construction and Regeneration Act 1996, and it works on retention exactly as it works on any other payment, which is the part that gets missed.

This page is what retention is, the two dates it comes back on, why yours is usually keyed to somebody else's finish, and the mechanism that turns a release into a sum the payer has to pay.

What retention is, and why it exists

Retention is a percentage of each interim payment that the payer keeps back rather than paying you, held as security that you will come back and put right anything that turns out to be defective. It is deducted from the gross valuation as the works proceed, so by the end of a £186,000 subcontract at 5% the payer is holding £9,300 of money you have already earned and already been valued for.

It is pure contract. The Construction Act governs when payments become due, when they must be paid and what happens when notices are missed, and it says nothing about how much anyone may retain or when they must let it go. That is set by the form you signed, which is why the contract a UK builder signs decides more about your retention than any statute does.

The government's own research into the practice is the best evidence available on how it plays out. Pye Tait Consulting surveyed clients and contractors for BEIS in 2017 and found that the typical amount retained equates to 4.8% of contract value, that 78% of contractor respondents put their typical rate at 5% and 11.1% at 3%, and that the average of the minimum rates experienced was 3.3% against an average maximum of 5.7%.

"Delays in paying retention monies appear to be commonplace in the construction sector. Around 71% of contractors surveyed with experience of having retentions held in the last three years have experienced delays in receiving retention monies over the same period."

Retention payments in the construction industry, Pye Tait Consulting for BEIS, 2017

The percentages: 5%, 3%, and the halving at practical completion

The customary shape is one number that halves. Five per cent is deducted while the works are running, and at practical completion the rate drops to half of that, so 2.5% is released and 2.5% stays behind until the defects are made good. On a 3% contract the same halving gives you 1.5% and 1.5%.

Some JCT forms express this as a percentage of what you get paid rather than as a percentage held back. In the JCT Minor Works family (MW/MWD 2016 clause 4.3) the mechanism runs on the applicable percentage: 95% of the value of work not yet at practical completion, 97.5% once practical completion has been certified, and 100% at the final certificate. Same arithmetic, opposite direction, and it catches people out when they go looking for the word "retention" in the contract and cannot find it. The Intermediate and Standard forms do it the other way round, deducting a stated Retention Percentage from the gross valuation, 3% being the JCT 2016 default and commonly amended to 5%, with half released at practical completion.

Public clients publish what they actually do, and Build UK collects it in one table as part of its Roadmap to Zero Retentions. It is worth reading before you price, because the spread is wide.

HS2's published position is that it is committed to having no cash retentions and will cascade that requirement through the supply chain. Network Rail did the same across CP6 and CP7 and passed it down to Tier 2. NEC4 keeps retention out of its core clauses: it appears only as secondary Option X16, which the parties have to select in the Contract Data, and which releases half when the whole of the works is completed or taken over and the balance on the Defects Certificate. That was already the position under NEC3, so an NEC4 contract holds retention only where X16 has been ticked. Check the Contract Data before you assume it does not. On the right job, the honest answer to "what is your retention" is now zero, and knowing which clients have already got there is a pricing advantage.

The two release dates

There are two, and they are separate events with separate certificates.

The first date is practical completion. Practical completion is reached when the works are finished to the point that the client can take possession and any outstanding items are trivial. It is a certified event: the contract administrator issues a practical completion certificate with a date on it, and that date is the trigger. Half the retention falls due, and the remaining half stays held.

The second date is the making good of defects. From practical completion a rectification period runs, commonly twelve months, during which anything that fails gets put on a schedule of defects and put right. When the last item is signed off the contract administrator issues a certificate of making good, renamed from the older certificate of making good defects in the JCT 2016 suite and carried forward into JCT 2024. That certificate releases the second half and, on most forms, brings on the final certificate.

Two dates, two certificates, two applications for payment. A firm that submits one application at practical completion and waits for the rest to arrive by itself has left half its retention with no clock running on it.

Your retention is keyed to somebody else's finish

Here is the structural fact that makes retention different from every other line on your invoice: as a subcontractor, your release dates are usually written against the main contract, not against your own work.

Your practical completion is the main contract's practical completion. Your rectification period runs from that date, not from the day you left site. So a groundworker who finished in March waits for a building that reaches practical completion in September, then waits another twelve months for a defects period covering trades that had not started when the groundworks were signed off. The Pye Tait research put it plainly: in house building, trades laying the foundations at the start have to wait longer for the end of the defects period than the decorators who arrive at the end, and a demolition subcontractor can finish a year before practical completion and therefore be a year behind on the defects clock.

The survey numbers show what that costs in months. Across all three tiers the intended holding period after practical completion was twelve months, agreed by 68.5% of tier 1, 73.6% of tier 2 and 76% of tier 3 respondents. What happened in practice was this:

The most common actual holding period reported by tier 3 firms was 24 months, by 36% of them. Add the six months a groundworker spends waiting for the main works to reach practical completion in the first place and the wait from their own last day on site runs past two and a half years. A statistical test in the same research confirmed that tier 2 and tier 3 firms wait significantly longer than tier 1 firms, which is the sentence to keep in mind the next time a main contractor explains that this is simply how retention works down the chain.

Section 110(1A) and the clause that ties you to the main contract

Before 2011 a subcontract could release your retention on the issue of a certificate under a contract you were not a party to, and if that certificate was not issued, your money stayed where it was. That is precisely what happened in Pitchmastic v Birse, a roofing subcontract on a Tesco project where the terms released the retention on the issue of the making good of defects certificate under the main contract. That certificate was not issued. The court held that Pitchmastic could recover the retention only if it could show that Birse had prevented the certificate from being issued. It could not, and £33,551.66 of retention stayed unpaid.

The Local Democracy, Economic Development and Construction Act 2009 rewrote the Construction Act to close that door with effect from 1 October 2011 in England and Wales and 1 November 2011 in Scotland. Section 110(1A) of the Housing Grants, Construction and Regeneration Act 1996 now reads that the requirement for an adequate mechanism for determining what payments become due and when "is not satisfied where a construction contract makes payment conditional on" the performance of obligations under another contract, or on a decision by any person as to whether obligations under another contract have been performed. Section 110(1B) confirms that the obligations referred to exclude payment obligations, which are dealt with separately by section 113, and section 110(1C) carves out the narrow case where one party has engaged the other to carry out the operations through a third person.

Read that against a subcontract clause releasing your second half "upon issue of the certificate of making good defects under the main contract". That certificate is a decision by a person as to whether obligations under another contract have been performed. Section 110(3) then does the work: where a contract does not contain the provision required by section 110(1), the relevant provisions of the Scheme for Construction Contracts apply instead, and the Scheme's own timetable takes over.

Section 113 does the same job for the money itself. A provision making payment conditional on the payer receiving payment from a third person is ineffective, other than where that third person is insolvent. "We get ours when we get ours" stopped being a contractual position a long time ago.

The instrument that fills the gap differs by nation. In England and Wales it is the Scheme for Construction Contracts (England and Wales) Regulations 1998, SI 1998/649, as amended for England by SI 2011/2333 and for Wales by SI 2011/1715. In Scotland it is the Scheme for Construction Contracts (Scotland) Regulations 1998, SI 1998/687, as amended by SSI 2011/371, carrying the same 5, 7 and 17 day periods. Northern Ireland runs on its own statute, the Construction Contracts (Northern Ireland) Order 1997, where the conditional payment provision is Article 12 and the notified sum provision is Article 10.

Trust status, and what a fiduciary trust actually buys you

The JCT Standard Building Contract treats the employer's interest in the retention as fiduciary, held as trustee for the contractor, and gives the contractor the right to require it to be placed in a separate bank account identified as retention money. The JCT Intermediate form has no equivalent wording. That difference is worth checking before you sign, because it decides what happens to your money if the payer fails.

The courts take the fiduciary language seriously. In Rayack Construction v Lampeter Meat, the contractor applied for an order that the retention be set aside into a separate account, and the judge agreed, holding that the contractor would be protected if the employer carried out its obligation to set aside the retention as a separate trust fund, and that the contractor "must be exposed to some degree of risk jeopardy if that is not done". In Wates Construction (London) Ltd v Franthom Property, the sub-clause requiring the money to be set aside on request had been deleted from the standard form, and the Court of Appeal still ordered it set aside, on the basis that the retention was held in a fiduciary capacity and that the only way the beneficiaries' interest could be safeguarded was for the fund to sit in a separate account and not be used for the purposes of the employer's business.

So what the trust buys you is rank. Money genuinely held on trust in an identified account is not the payer's money, and on insolvency you are not standing in the queue of unsecured creditors for it. What the trust does not buy you is the money appearing in that account by itself. The courts can compel the account to be opened by mandatory injunction, and that remedy is worth far more before an insolvency than after one, because a trust over a fund that was not funded protects nothing.

The scale of the gap is in the same research. Across the surveyed clients, 87% held the full retention in their main bank account and fewer than 5% held it in a separate ring-fenced account. Among contractors the figure was 89% in the main bank account, and none of the contractors surveyed held any retention in trust. Construction remains the UK's worst sector for company insolvency, with 3,805 company insolvencies in the twelve months to June 2026 on Insolvency Service figures, so the question of whose money it is when the music stops is not academic.

Asking is a paragraph, and the time to send it is at the first interim application rather than at the end:

Under clause [x] of our contract the Retention is held by you in a fiduciary capacity as trustee for us. We hereby request that the Retention deducted to date, £[amount], and all further Retention as it is deducted, be placed in a separate bank account designated to identify it as retention money held for [your company]. Please confirm the account has been opened and provide the account details for our records.

Send it once, in writing, and keep the reply. If the money is later in dispute, a request made and ignored at valuation 3 reads very differently from one made after the payer has gone quiet.

Turning a retention release into a notified sum

This is the part that turns retention from a request into a debt, and it is the strongest mechanism a UK subcontractor has.

A retention release is a payment provided for by a construction contract. That means the whole notice regime applies to it, and the regime is unforgiving of the payer.

Apply for it. Submit an application for payment for the retention release, with a date, a number and the basis of calculation. This is the step firms skip: they wait to be paid rather than applying to be paid, and an amount that has not been applied for has no due date and therefore no clock.

Section 110A: their notice, within five days. A construction contract must require the payer or a specified person to give the payee a notice not later than five days after the payment due date, specifying the sum the payer considers to be or to have been due at the payment due date and the basis on which that sum is calculated. Section 110A(4) puts it beyond argument that it is immaterial that the sum may be zero, so a payer who considers nothing to be due still has to say so, on paper, inside five days.

Section 110B: your notice, if theirs does not arrive. Where the payer gives no notice, the payee may give one specifying the sum the payee considers to be due and the basis of calculation. The final date for payment of the sum specified in that notice is then postponed by the same number of days as the notice was late. A default payment notice is a short document and it converts silence into a number.

Section 111: the notified sum has to be paid. Section 111(1) is the crown jewel of the Act, and it is worth quoting in full: "where a payment is provided for by a construction contract, the payer must pay the notified sum (to the extent not already paid) on or before the final date for payment". Section 111(2) defines the notified sum as the amount in whichever notice was validly given, including one given by you under section 110B. The only escape is section 111(3): a notice of intention to pay less than the notified sum, which under section 111(4) must specify the sum the payer considers to be due on the date the notice is served and the basis on which that sum is calculated, and which under section 111(5) must be given not later than the prescribed period before the final date for payment. Section 111(7) sets that prescribed period as whatever the parties agreed, or in the absence of agreement, the period in the Scheme.

Where no valid payment notice and no valid pay less notice have been served, the sum in your application is the notified sum and it is payable in full at the final date for payment. In Grove Developments Ltd v S&T (UK) Ltd the Technology and Construction Court held, and the Court of Appeal upheld, that the payer must pay that sum first and can only then start an adjudication about its true value. Applied to retention, that means a payer who ignores your retention application for a fortnight has lost the argument about whether the defects were made good, at least for now. The detail of the notice you are hoping they miss is in the pay less notice.

The default periods, where your contract is silent or non-compliant and the Scheme fills the gap, are these.

What the written request contains

A retention application is a payment application, so give it the same furniture as one. Six things make it work.

The statement of retention is the one to build early. It is a four-line schedule that follows the job:

Any payer can check that in ten seconds, which is exactly the point. An application that arithmetic can be checked against is much harder to sit on than an email asking what has happened to the retention.

Counting it from 12 September 2025

Take a £186,000 subcontract, 5% retention, half at practical completion and half at making good, a twelve-month rectification period, and the Scheme's timetable filling the gaps. The main works reach practical completion on 12 September 2025.

First half, £4,650.

If nothing arrives by 27 September, serve a default payment notice under section 110B on 29 September. It was due on the 27th, so it is two days late, and the final date for payment moves two days with it to 11 October 2025, with the pay less deadline moving to 4 October. Either way, by 9 or 11 October the £4,650 is a notified sum and section 111(1) says it must be paid.

Second half, £4,650.

Thirteen months and thirteen days from practical completion to the last of your money, and that is the version where the certificates arrive on time. For the groundworker who left site on 14 March 2025, the same sequence is nineteen months from their last day. Run it instead on the tier 3 average of 22.6 months after practical completion and the second half lands at the end of July 2027, twenty-eight months after they packed up.

The difference between the two versions is not the law. It is whether somebody applied for the money on a dated document and then counted the five days and the seventeen days.

When the request is ignored

Section 108 of the Construction Act gives a party to a construction contract the right to refer a dispute arising under the contract to adjudication at any time. Retention disputes are well suited to it: the amount is arithmetic, the release event is a certificate with a date on it, and the timetable is short. The notice of adjudication goes to the other side, an adjudicator is appointed and the dispute referred within seven days, and the decision follows within 28 days of the referral, extendable by 14 days with the referring party's consent alone.

The cost is knowable in advance, which is the part firms writing off a few thousand pounds tend not to realise. TeCSA charges £450 for a standard nomination and £250 under its Low Value Disputes service, which covers claims up to £100,000 and caps the adjudicator's fee at £2,000 for claims to £10,000, rising in bands to £5,000 for claims to £100,000. Section 108A means costs cannot be pre-allocated against you by a clause agreed before the notice of adjudication, so each side carries its own and the adjudicator apportions only their fee. Other nominating bodies include the RICS Dispute Resolution Service, CIArb, RIBA, CIC and ICE. For an unpaid retention of £4,650, a capped £2,000 fee shared between the parties is a very different proposition from writing the money off, and starting an adjudication walks through the notice and the referral. Where the sum is large or the defects allegations are serious, an hour with an adjudication specialist before you serve the notice is money well spent.

Interest runs on retention like any other commercial debt. The Late Payment of Commercial Debts (Interest) Act 1998 implies a right to simple interest at 8% over the Bank of England base rate, currently 11.75%, together with a fixed sum under section 5A of £40, £70 or £100 depending on the size of the debt, and reasonable recovery costs above that fixed sum. It applies whether or not your contract or your invoice mentions it, and late payment interest has the arithmetic.

What to record on every job from day one

Retention goes missing because the facts that release it live in five different places. Capture these at the start and the application writes itself two years later.

Two of those are worth chasing before you need them. Ask for a copy of the practical completion certificate the week it is issued, and diarise the end of the rectification period the day you get it, because the certificate of making good is the one that tends to arrive late or not at all, and the twelve months are much easier to count forward than backward.

You can also check how a client behaves before you sign. Under the Reporting on Payment Practices and Performance (Amendment) Regulations 2025, SI 2025/75, in force on 1 March 2025 for financial years beginning on or after 1 April 2025, large companies must publish whether they use retention clauses in construction contracts, their standard rate, the contract value below which they hold none, a description of the process for releasing money retained, whether their supply chain terms are no more onerous than their own client-side terms, and the value of money retained. It is free to search at check-payment-practices.service.gov.uk, and failing to publish is an offence triable summarily.

Retention is on its way out

The Department for Business and Trade consulted on late payment from 31 July to 23 October 2025 and published its response on 24 March 2026. Measure 8 deals with retention payments under construction contracts, and the government's stated position is direct: "we propose to ban the practice of deducting and withholding of retention payments under the terms of a construction contract". It does this by amending Part 2 of the Housing Grants, Construction and Regeneration Act 1996 itself, through the Commercial Payments Bill introduced to Parliament in May 2026, with respondents mainly supporting a transitional period of 12 to 24 months. Of the 238 construction sector responses, 87% favoured reform.

Nothing in it is retrospective, so retention deducted under a contract you signed this year is governed by the rules on this page. What it does change is the conversation you can have about the contract you are signing next. The retentions ban has the detail and the dates.

What it costs

There is no monthly subscription on AEC Stack. The platform fee is 2.5% of each invoice processed through the platform, taken when the invoice is paid, so a quiet month costs nothing.

Your retention lives on the job rather than in a spreadsheet somebody has to remember. Each valuation carries the retention deducted, the running statement of retention builds itself as you invoice, and the practical completion date and the end of the rectification period sit on the job as dates rather than as things you meant to write down. When a release falls due, the application goes out as an application for payment with the sum, the basis of calculation and the release event on it, and the five days and the seventeen days are counted from the date it went.

Open an invoice with the retention line on it, put in the practical completion date from your last job, and see which of the two release dates has already gone by.