Builders · Money and payments

Deposits, stage payments and late payment

The aim is simple: keep the money in step with the work, so neither side carries too much risk.

Information, not legal advice. This guide explains official rules in plain words for England, with links to the sources. Rules change and every job is different, so check the source or get advice for your situation. Last checked 24 October 2026.

Deposits and staged payments

Citizens Advice tells homeowners to avoid large upfront payments and not to agree to a deposit of more than 25% (Citizens Advice). Expect careful customers to follow that advice. A clear schedule of stage payments, each tied to finished and checkable work, protects you and reassures them. Where expensive materials must be ordered early, some builders invoice for them separately on delivery, or let the client buy them direct.

The Late Payment Act: business clients only

The Late Payment of Commercial Debts (Interest) Act 1998 applies only where both the supplier and the customer are acting in the course of a business (s.2). It does not apply to an ordinary homeowner having work done on their own home.

For business clients (developers, landlords, companies, main contractors), GOV.UK explains that you can claim (GOV.UK):

• statutory interest of 8% plus the Bank of England base rate, unless your contract sets a different rate
• a fixed sum for recovery costs: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more (s.5A)
• reasonable recovery costs above the fixed sum, in some cases (s.5A)

If no payment date is agreed, payment is late 30 days after the customer gets the invoice or you deliver the service, if that is later (GOV.UK).

Interest with homeowner clients

With a consumer, interest on late payment only applies if you agreed it in the contract, and the term must be fair and transparent (CRA s.62). If you go to court, interest can usually be claimed on a money claim, typically at 8% (GOV.UK).

The Construction Act and homeowners

The Housing Grants, Construction and Regeneration Act 1996 (often called the Construction Act) gives rights to stage payments, payment notices, suspension for non-payment and adjudication. But it does not apply to a contract with a residential occupier: work mainly on a house or flat that one of the parties lives in or intends to live in (s.106). For homeowner jobs, your rights to stage payments come from the contract you agree. See the Construction Act guide.

Retentions

Some contracts let the client hold back a small percentage until defects are fixed. If you agree one, write down how much, how long it is held, and exactly what triggers release.

Good habits

• Invoice promptly, with the stage, amount, due date and how to pay.
• Give your bank details in the contract, and tell clients you will never change them by email alone.
• Only stop work for non-payment if your contract allows it. For homeowner jobs there is no statutory right to suspend under the Construction Act.