SiteKiln gives you plain-English information, not legal advice. It's aimed at small UK construction businesses. Laws change and every job is different, so speak to a solicitor or adviser before you rely on this for a real dispute.
There's no fixed law that says "a builder's deposit must be X%" -- but in the UK domestic market, 5-25% is generally seen as normal, with anything far above that looking like a red flag unless there's a clear reason.
1. The short version
What protects you is not some magic percentage, but clear written terms: what the deposit covers, when it's non-refundable or partly refundable, how it ties into cooling-off rules, and how the rest of the payments are staged so you're not funding the whole job out of your own pocket.
2. Where you stand legally
- There is no statute that sets a fixed maximum deposit for domestic building work, but consumer law and unfair terms / unfair trading rules still apply:
- Deposits and payment terms must be transparent, not misleading, and not grossly one-sided.
- You should not demand full payment up front for long jobs except in very unusual, clearly explained circumstances.
- Consumer guidance (what your clients read) typically says:
- Don't pay everything up front.
- Try to avoid more than 25% as a deposit on domestic jobs.
- Ask for clear receipts and to see what the deposit covers.
- If the contract is made off-premises or at a distance (at their home, or fully online/phone), consumer-contract rules normally give a 14-day cooling-off period:
- If they cancel within that period and you've not started, they can usually get the deposit back.
- If they asked you to start within the 14 days and then cancel, they can still be liable for the value of work already done and costs you reasonably incurred, which can come out of the deposit.
- Unfair-trading and pricing guidance expects:
- Your headline price and key payment terms, including any mandatory deposits, to be clearly given before they commit.
- No or surprise charges dressed up as "non-refundable" if that wasn't made clear.
So the law doesn't ban big deposits outright -- it cares whether what you're doing is fair, clearly explained, and in line with the customer's rights if they cancel or you mess up.
3. How much you can sensibly take
Think about it in three bands, rather than one magic number.
0-10% -- the "low-risk" deposit
- Common for small jobs or where materials are easy to return.
- Looks very reasonable to consumers and on forums.
- Good for reputation but doesn't give you much cover if they cancel late.
10-25% -- the "normal domestic" range
- Widely quoted in consumer guidance and builder advice as typical.
- Citizens Advice tells homeowners to push down deposits and avoid more than 25% where they can.
- Works well if you:
- Explain it's for booking the slot and initial materials.
- Back it with proper terms about what's refundable if they cancel.
Over 25% -- high and needs a strong justification
- Big number jobs, bespoke materials or fabricated items may need more, but you need to be able to show why (non-reusable, special order, etc.).
- Consumer-side guidance treats very high deposits as a warning sign, especially if not protected.
- If you do this without clear terms and protection, it's the sort of thing Trading Standards / CMA frown on as unfair.
The sweet spot for most domestic builders is usually 10-25% plus clear staged payments that keep you and the client roughly in step.
4. What actually protects you (and the client)
The real protection is how you structure the deal, not just the deposit size.
Clear contract and schedule
- Written quote/contract with total price, deposit amount, and a stage-payment schedule that ties money to clear milestones (e.g. rip-out, first fix, second fix, completion).
- Make sure it's obvious that the deposit is part of the overall contract sum, not an extra fee.
What the deposit covers
- Spell out whether it covers booking the slot, initial labour, and/or materials.
- If it's for materials, consider ordering in the customer's name or letting them see invoices so they know it's going into their job.
Protection mechanisms (optional but reassuring)
- Deposit protection schemes / escrow -- money held in a separate or joint account, released at agreed milestones.
- Insurance-backed guarantees that cover deposits if you go bust.
- Joint builder-client bank accounts (as suggested in some FMB-style contracts) for larger projects.
Transparency about risk
- Many consumer guides tell clients to ask if their deposit is protected and what happens if you go out of business.
- You don't need every bell and whistle on every small job, but the more money you take up front, the more you should be ready to show it's being handled properly.
5. Deposits and cancellations -- when you can keep some or all
This is the bit where most builders either get too soft or go too hard.
If they cancel within the 14-day cooling-off period and you haven't started
- They can usually cancel and get the deposit back in full.
- You avoid this risk by either:
- Not starting within 14 days, or
- Getting a clear written request to start early, plus terms explaining what's payable if they cancel.
If they cancel within 14 days but you have started at their request
- They can still cancel, but you can charge for work done and reasonable costs incurred up to cancellation, which can be taken from the deposit.
- Anything above that should normally be refunded.
If they cancel after 14 days / outside cooling-off
- It's down to your contract -- you can usually keep enough of the deposit to cover:
- Time already spent,
- Non-recoverable materials,
- Lost profit if you can't fill the slot (within reason).
Citizens Advice tells consumers to negotiate if they think you're keeping too much -- so expect push-back if you try to keep it all after doing very little.
Key point: a "non-refundable" label is not a magic shield if what you're keeping is clearly out of proportion to your actual loss -- that's when unfair-terms arguments appear.
6. Common mistakes
- Asking for huge deposits with no explanation or protection -- consumer and surveyor advice treats very big, unprotected deposits as a major red flag; it makes clients nervous and looks bad if anything goes wrong.
- Not tying deposits to actual costs -- if you can't show how the deposit links to materials, labour, or slot-booking, it's hard to justify keeping any of it if they cancel early.
- No written terms on cancellations -- leaving cancellation and deposit refunds to "common sense" is how you end up on the back foot when someone walks away three days before start.
- Taking everything up front -- asking for 100% before you've lifted a tool is strongly discouraged in consumer guidance and can look like unfair practice.
- Not considering your own risk -- being scared to take any deposit at all on big domestic jobs means you carry all the risk if they cancel or drag their feet; a sensible, well-explained deposit is part of running a grown-up business.
7. Who to contact
- Citizens Advice -- consumer guidance -- their building-work pages are exactly what clients read about deposits and cancellations: 0800 144 8848 (free)
- Business Companion -- official guidance on pricing transparency and upfront information: businesscompanion.info (free)
- Trade bodies (FMB etc.) -- model contracts and stage-payment structures that handle deposits sensibly: fmb.org.uk (member benefit)
- Your accountant / adviser -- structuring payment schedules and cashflow so you're not over-reliant on big deposits (paid)
- Solicitor -- to sanity-check your standard terms on deposits and cancellation, so they're firm but fair (paid)
8. Sources and legislation
- Consumer Rights Act 2015 -- Part 1, Chapter 4 (services remedies including refunds). legislation.gov.uk/ukpga/2015/15
- Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 -- 14-day cooling-off period, cancellation rights, and liability for services started during cooling-off. legislation.gov.uk/uksi/2013/3134
- Unfair Contract Terms Act 1977 -- limits on unfair exclusion clauses. legislation.gov.uk/ukpga/1977/50
- Consumer Protection from Unfair Trading Regulations 2008 -- misleading pricing and charges. legislation.gov.uk/uksi/2008/1277
- CMA guidance on unfair contract terms -- gov.uk/government/publications/unfair-contract-terms-cma37
- Citizens Advice -- "Before you get work done on your home" guidance on deposits and protection: citizensadvice.org.uk
9. Related guides on this site
- 9.3 Customer changed their mind mid-job
- 9.11 Customer demanding a refund -- when you have to and when you don't
- 1.2 Domestic client won't pay the final invoice
- 8.5 Writing quotes that protect you
- 8.6 Terms and conditions template -- domestic work
- 1.14 Cashflow basics
Know someone who needs this?
Was this guide useful?
Didn't find what you were looking for?
Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.
In crisis? Samaritans 116 123 ·