SiteKiln gives you plain-English information, not legal advice. It's aimed at small UK construction businesses and sole traders. Laws change and every job is different, so speak to a solicitor or adviser before you rely on this for a real dispute.
You've blocked out three weeks, turned down other work, and now they want to "push it back a couple of months". Sound familiar? You're left with a hole in the diary, no income, and a customer who thinks they've done nothing wrong because they haven't actually cancelled -- they've just moved the goalposts. Again.
This guide covers when you can keep a deposit, the cooling-off rules you need to know about, how to write fair cancellation terms that actually stand up, and what to do when a customer keeps stringing you along. Every legal reference is cited so you can look it up yourself.
1. When you can keep a deposit -- the four rules
This is where most trades get it wrong. You can absolutely take deposits and keep them when a customer cancels -- but only if you follow four rules that come straight from the Consumer Rights Act 2015 (CRA 2015).
Rule 1: The term must be fair (CRA 2015, Section 62)
Section 62 of the CRA 2015 says that a contract term is unfair if it creates a "significant imbalance in the parties' rights and obligations" to the detriment of the consumer, contrary to the requirement of good faith. If a term is unfair, it is not binding on the consumer. Full stop. The rest of the contract still stands, but the unfair term gets struck out.
In plain English: if your deposit clause only protects you and gives the customer nothing, a court or ombudsman can bin it.
Rule 2: You cannot keep money for services you have not supplied (CRA 2015, Schedule 2, Paragraph 7)
Schedule 2 of the CRA lists terms that may be regarded as unfair. Paragraph 7 flags any term that lets you dissolve the contract on a discretionary basis and keep payments for services not yet provided. So if the customer cancels before you have done anything, keeping the full deposit is going to be hard to defend unless it genuinely reflects what you have lost.
Rule 3: Cancellation charges must not be "disproportionately high" (CRA 2015, Schedule 2, Paragraph 6)
Paragraph 6 flags terms that require a consumer who fails to fulfil their obligations to pay a "disproportionately high sum in compensation." A 50% cancellation fee on a job you have not started is a textbook example of what this paragraph is aimed at. The charge has to match your actual losses.
Rule 4: What's good for the goose (CRA 2015, Schedule 2, Paragraph 4)
Paragraph 4 flags terms that let you keep sums paid by the consumer when the consumer cancels, without providing for equivalent compensation if you cancel. Translation: if your terms say the customer loses their deposit when they cancel, but you can walk away without owing them a penny, that imbalance is exactly what the CRA calls unfair. Either both sides have skin in the game, or neither does.
The practical test
GOV.UK tells consumers directly: "Don't just accept the business can keep your deposit. A business can only keep deposits or charge cancellation fees if the term is fair and reasonable. They are only entitled to keep an amount that covers their actual losses."
Citizens Advice tells consumers: if you cancel, the trader may ask for a cancellation fee and/or loss of profit if they set aside time. If you paid a deposit, they will "most likely hold some or all of it" to cover these losses -- but you can negotiate if the amount is unreasonable.
Old OFT guidance (still widely cited by ombudsmen and ADR providers) says a deposit can fairly be non-refundable if it is a small charge for reserving your slot. Once the deposit gets big -- 25%, 30%, 50% of the job -- it has to be a genuine pre-estimate of loss, not a punishment.
The bottom line: You can keep money that matches what you have actually lost. Materials ordered, diary time blocked, work turned down, admin done. You cannot keep money as a punishment. If you can explain your figures to a judge over a cup of tea, you are probably fine. If you would struggle to justify them, you are not.
2. The 14-day cooling-off period (Consumer Contracts Regulations 2013)
If the customer booked online, over the phone, or you signed them up at their home (including at their front door, in their garden, or on their driveway), the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR 2013) give them a 14-day cooling-off period. This is separate from the CRA 2015 and it overrides your terms.
When it applies
The cooling-off period applies to:
- Distance contracts -- booked by phone, email, WhatsApp, website, social media, or any means where you and the customer are not face to face at the moment the deal is agreed.
- Off-premises contracts -- agreed at the customer's home, on site, or anywhere that is not your normal business premises (your office, showroom, or yard).
When it does not apply
- Contracts agreed at your business premises (your office, showroom, or yard).
- Contracts where the consumer specifically requested your visit to carry out urgent repairs or maintenance (but only for the urgent work itself -- any extras you agree while there are still covered by the cooling-off period).
What the customer can do
Within 14 days of the contract being made, the consumer can cancel for any reason and get a full refund of everything they have paid, including the deposit.
What you can charge
If the consumer specifically asked you to start work within the 14-day period AND you gave them the right pre-contract information (including telling them about their cancellation rights), you can deduct a proportionate amount for the work actually done up to the point of cancellation. You cannot charge for work not yet done or materials not yet used.
If you did not give the right information, you cannot charge anything -- even if you have already started.
Tip: If you take bookings over the phone, by WhatsApp, or at the customer's home, include a line in your terms that says: "If you would like us to begin work or order materials within the 14-day cooling-off period, please confirm this in writing." And make sure you give them a written notice of their cancellation rights at the time of booking. That is what the regulations require, and it protects you if they cancel after you have started.
Tip: If you want the cooling-off issue to go away entirely on smaller jobs, meet the customer at your premises to sign the deal. A quote signed at your office or yard is an on-premises contract and the 14-day right does not apply.
3. How to write fair cancellation clauses
The goal is terms that are clear, proportionate, and would survive a challenge under the CRA 2015. That means tying everything to actual costs, being fair in both directions, and spelling out exactly what happens at each stage.
What makes a clause defensible
- It reflects your genuine losses, not a round punitive number.
- It covers what happens if either side cancels -- not just the customer (Schedule 2, Paragraph 4).
- Cancellation charges are not disproportionately high (Schedule 2, Paragraph 6).
- You are not keeping money for work you have not done (Schedule 2, Paragraph 7).
- It is written in plain English, not buried in small print.
Example cancellation clause (copy-paste ready)
Cancellation and postponement terms
A non-refundable booking fee of [£X / X%] is payable on acceptance to secure your start date. This covers administration, planning, site visits, and holding your slot in our schedule.
If you cancel before we order materials: the booking fee is retained and any remaining deposit is refunded within 14 days.
If you cancel after materials have been ordered: we retain the booking fee plus the cost of any non-returnable materials already purchased. Receipts will be provided on request.
If you cancel after work has started: you pay for all work completed to date at the agreed rate, plus materials used, and we retain the booking fee. Any overpayment is refunded within 14 days.
If we cancel or are unable to carry out the work: we refund your deposit in full, including the booking fee, within 14 days.
Postponements: We can reschedule the start date once at no additional charge, provided you give at least [14/21] days' notice. If the start date is postponed more than twice, or delayed by more than [8/12] weeks in total from the original date, we reserve the right to treat the booking as cancelled under these terms.
All retained amounts reflect our genuine costs incurred. We will not charge cancellation fees beyond our actual, evidenced losses.
Example reschedule clause (for quotes)
"Start date changes: one free reschedule with [14] days' notice. A second reschedule incurs a rebooking fee of [£X] to cover diary reorganisation. A third postponement, or total delay exceeding [12] weeks, allows us to treat the contract as cancelled and retain the booking fee."
4. Real-world case study: the landscaper who got messed around for a year
A landscaper we know -- call him Tom -- got booked for a garden project worth around £8,000. Deposit of £1,200 paid, start date agreed for the spring.
Then the customer postponed. "Can we push it back a month? We're having the kitchen done first." Fair enough -- Tom rescheduled.
A month later, same thing. "The skip's still on the drive, can we do September instead?" Tom moved it again. He had already turned down two other jobs to hold the slot.
September came. The customer had decided to supply their own materials -- paving, sleepers, gravel -- to save money. Half of it arrived late. Some of it was the wrong specification. The customer wanted Tom to start anyway with what was there and "work around it."
Tom pushed back, said he would start when everything was on site and checked. The customer got annoyed. More delays. By this point it had been nearly a year of diary chaos, three start dates binned, and Tom had lost thousands in work he could have taken.
What Tom should have done differently
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Taken a booking fee, not just "a deposit" -- with clear written terms about what happens on postponement. A booking fee of £200-300 for reserving the dates, separate from any materials payment, would have been easy to defend under the CRA because it is a small, proportionate charge for a real service (holding his diary).
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Set a firm postponement limit -- one free reschedule, then a rebooking fee, then cancellation after the third. Put it in writing at the point of booking.
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Refused to accept customer-supplied materials without a written agreement covering delivery deadlines, specification checks, and what happens if the materials are late, wrong, or inadequate (see the separate guide on customer-supplied materials).
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Confirmed every change in writing -- even a WhatsApp message after a phone call saying "Just to confirm, we've moved to [date]. This is the second reschedule under our terms."
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Sent the "one last date" email (see Template 2 below) after the second postponement instead of just absorbing it.
What Tom can still do now
- Write to the customer confirming one final start date with a deadline for all materials to be on site and checked.
- State clearly that if the date is postponed again or materials are not ready, the booking is cancelled and the deposit is retained under the original terms to cover evidenced losses (diary time, work turned down, admin).
- Keep records of every postponement, every message, and every job he turned down. That paper trail is his evidence if it goes to a dispute.
5. Email and message templates
Template 1: Booking confirmation with reschedule rules
Subject: Booking confirmed -- [address] -- [your business name]
Hi [Name],
Thanks for confirming the work at [address]. Here is a summary:
- Work: [brief description]
- Agreed start date: [date]
- Estimated duration: [X days/weeks]
- Total quoted price: £[amount]
- Booking fee paid: £[amount] (non-refundable -- covers admin, planning and holding your dates)
- Deposit paid: £[amount] (offset against final invoice)
Reschedule policy: I understand things come up. If you need to move the start date, please give me at least [14/21] days' notice. I can reschedule once at no extra cost. If the start date is moved more than twice, or delayed by more than [8/12] weeks in total, I will need to treat the booking as cancelled. In that case, the booking fee is retained to cover my costs and any remaining deposit is refunded within 14 days.
Cooling-off: Under the Consumer Contracts Regulations 2013, you have the right to cancel within 14 days of this agreement. If you want me to start work or order materials within that period, please let me know in writing and I will get things moving. If you cancel within the 14 days, I will refund everything except a fair charge for any work already done at your request.
If you are supplying any materials yourself, they need to be on site, checked and approved at least [3/5] working days before the start date. If they are not ready, I may need to release your dates.
Any questions, just give me a shout.
Cheers, [Your name]
Template 2: "One last date" final notice
Subject: Your booking -- [address] -- final date needed
Hi [Name],
We have now rescheduled the work at [address] [twice/three times] since the original start date of [date]. I understand things have been tricky your end, but the repeated changes have meant I have had to turn down other work and rearrange my diary each time.
I would like to get this sorted for both of us. Can you confirm a final start date within the next [2/4] weeks? I will hold that date for you, but I do need to let you know that if we need to move it again, I will have to treat the booking as cancelled under our agreed terms and retain the booking fee of £[amount] to cover my costs (diary time, admin, and work I have turned down to hold your slot).
[If customer-supplied materials apply:] All materials will need to be on site, correct specification, and checked at least [3/5] working days before the start date.
I am not trying to be difficult -- I just need to plan my work and make sure I am not turning away other customers indefinitely.
Let me know and we will get it locked in.
Cheers, [Your name]
Template 3: Cancellation and partial refund confirmation
Subject: Booking cancelled -- [address] -- refund details
Hi [Name],
Following our conversation on [date], I am confirming that the booking for the work at [address] has been cancelled.
Here is a breakdown:
- Total deposit paid: £[amount]
- Booking fee retained: £[amount] (non-refundable as per our terms -- covers administration, planning, site visits, and diary time held since [original booking date])
- Non-returnable materials cost retained: £[amount if applicable] (receipts attached / available on request)
- Work turned down during holding period: [brief note if relevant, e.g. "I turned down two comparable jobs to hold your dates"]
- Refund due to you: £[amount]
The refund of £[amount] will be sent to [bank transfer / original payment method] within 14 days.
All retained amounts reflect my genuine costs incurred. If you would like to see receipts or a more detailed breakdown, I am happy to provide them.
I am sorry it did not work out this time. If you would like to rebook in the future, you are welcome to get in touch.
Cheers, [Your name]
6. What to do if they dispute it
If the customer pushes back and says you are keeping too much, here is the order of play:
Step 1: Show your workings
Send them a clear breakdown of what you have retained and why. Receipts for materials, dates you held, jobs you turned down. Most disputes die at this stage because the customer can see the numbers are fair.
Step 2: Offer to talk it through
A five-minute phone call often sorts what 20 emails cannot. Be calm, be factual, and do not get drawn into an argument. You are not punishing them -- you are covering your genuine costs.
Step 3: Check your insurance
Many trade insurance policies include legal expenses cover for contract disputes. If you have it, use it. Your insurer can advise on whether your position is strong and may even handle the dispute for you.
Step 4: Ombudsman and ADR
If the customer goes to an ombudsman or alternative dispute resolution (ADR) provider, the pattern from past decisions is clear: traders who keep large deposits without clear justification are routinely told to refund most of it. Traders who can show a proportionate breakdown of real costs generally keep what they have retained.
Step 5: Small claims court
If the amount is under £10,000 (England and Wales), this goes to the small claims track. You do not need a solicitor. The judge will look at your terms, your evidence, and whether the amount you kept was a genuine pre-estimate of loss or a penalty. If your terms followed the four rules in Section 1 of this guide, you are in a strong position.
Tip: The single most powerful thing you can do is keep a paper trail. Save every WhatsApp message, every email, every phone call note. Write down dates, amounts, and the names of jobs you turned down. If it ever goes to a dispute, the person with the paper trail wins.
7. Who to contact
- Citizens Advice -- free advice on consumer disputes and contract terms: 0800 144 8848 (England), citizensadvice.org.uk
- Your insurer -- check whether your policy includes legal expenses cover for contract disputes. Many do and most trades never use it.
- A solicitor -- if the amount at stake is significant (usually £2,000+), a 30-minute paid consultation can save you from a weak claim or a bad settlement. Look for firms that list construction or consumer law.
- Trading Standards -- contact through Citizens Advice, who can refer you. Useful if the customer's behaviour crosses into harassment or fraud.
- Federation of Master Builders (FMB) -- if you are a member, they offer dispute resolution guidance and template contracts: fmb.org.uk
8. Related SiteKiln guides
s16-writing-your-first-quote-- how to write quotes that protect you from day one14.1-day-rate-vs-price-work-vs-quoted-- choosing the right pricing model for the jobmaterial-pricing-and-markup-- getting your materials pricing rightdeposits-vs-booking-fees-- the difference between a deposit and a booking fee (and why it matters)protecting-your-diary-- how to stop customers wrecking your schedulesacking-a-customer-- when it is time to walk awaycustomer-supplied-materials-- protecting yourself when they supply their own kit
9. What to do next
- Review your current terms today. If you do not have a written cancellation and postponement clause, write one now. Use the example wording in Section 3 as a starting point.
- Check your terms against the four CRA rules. Are they fair in both directions? Are the amounts proportionate? Could you explain them to a judge?
- Add the cooling-off notice to your booking confirmations. If you take bookings by phone, WhatsApp, or at the customer's home, you are legally required to tell them about their 14-day cancellation rights under the Consumer Contracts Regulations 2013.
- Talk to your insurer. Ask whether your legal expenses cover includes contract disputes. You might already be covered and not know it.
- Start confirming everything in writing. Even if it is just a WhatsApp message after a phone call: "Just to confirm, we have moved to [date]. This is reschedule number [X] under our terms."
10. Sources
- Consumer Rights Act 2015 -- Part 2 (unfair terms in consumer contracts), Section 62 (requirement of fairness), Schedule 2 paragraphs 4, 6, and 7 (indicative list of unfair terms). legislation.gov.uk/ukpga/2015/15/part/2
- Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 -- 14-day cooling-off period for distance and off-premises contracts. legislation.gov.uk/uksi/2013/3134
- GOV.UK -- "Cancelling goods or services: your rights" (consumer-facing guidance on deposits and cancellation fees). gov.uk/consumer-protection-rights
- Citizens Advice -- "Cancelling a service you have arranged" (consumer guidance on deposits, cancellation fees, and loss of profit). citizensadvice.org.uk
- Office of Fair Trading (OFT) -- Guidance on Unfair Terms in Consumer Contracts (OFT311, now superseded but still widely cited by ADR bodies and ombudsmen on proportionality of deposits).
- Competition and Markets Authority (CMA) -- Unfair contract terms guidance (successor to OFT guidance). gov.uk/government/organisations/competition-and-markets-authority
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