Work out how much retention is withheld on a contract, and how much is due at practical completion versus the end of the defects liability period.
Retention is a percentage of the certified value of work — typically 3% to 5% — that the contractor or client holds back from each payment, as security against defective or incomplete work. It isn't a statutory scheme like CIS; the rate, release points, and timing are set entirely by whatever the contract says, so the actual figures in your JCT, NEC or bespoke contract always take priority over any general assumption.
Retention is usually released in two stages:
For subcontractors especially, retention can tie up a meaningful slice of a project's value for a year or more after the work is finished — money that's already been earned but isn't paid. This is a long-standing complaint in the UK construction industry, and was the subject of a 2017–18 government consultation into reforming or scrapping the practice, though no legislation has yet followed.
No — the percentage, release trigger and defects liability period length are all set by the specific contract. Standard JCT contracts commonly default to 3% or 5%, but bespoke or negotiated contracts can set any figure.
Retention money is not automatically protected or ring-fenced unless the contract specifically requires it to be held in a separate trust account. If the party holding retention becomes insolvent, subcontractors are often left as unsecured creditors for that amount — a key reason retention reform has been debated.
Late release of retention is treated as a late payment under the contract. Depending on the terms, this may allow a claim for statutory interest — see the Late Payment Interest Calculator for what that could add up to.