Are cash retentions in construction being banned?
Not yet: the Government proposed a ban in March 2026, but it will consult again first, and no new law is expected before 2027.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
The proposal is in Late payment consultation: time to pay up, government response, published on 24 March 2026. It proposes banning the deduction and withholding of retention under construction contracts. Before deciding how to bring that in, the Government will consult the industry further. It will also work with the industry on other ways to give clients security for build quality. None of this is law. Until a law is passed, the retention clause in your subcontract still applies, including in subcontracts you sign now. And a proposal releases nothing already held. Retention on your jobs today still comes back only through the release terms in each subcontract. So keep asking for each release on its date, and recover anything overdue now rather than waiting for a ban.
Example
Illustrative example. The scenario and figures are invented.
The facts
A cladding subcontractor has £64,000 of retention held across nine finished jobs. The directors read about the proposed ban and decide to wait for it.
What happens
- The proposal is checked. It is not law, it will be consulted on again, and it releases nothing already held.
- Each job's release dates are worked out from its subcontract. Five have releases that fell due and were never asked for, £29,000 in total.
- The requests for those five go out that month, each citing its clause, its trigger and its sum.
- The other four jobs go in the diary against their release dates.
The retention in figures
| Item | Jobs | Amount |
|---|---|---|
| Retention held | 9 | £64,000 |
| Fallen due and never asked for | 5 | £29,000 |
| Still to fall due | 4 | £35,000 |
The outcome
The £29,000 is chased now under the subcontracts, instead of waiting on a proposal that releases nothing.
Until a ban is law, Retention Claim gets back the retention you are owed now, and Retention Loss Prevention makes sure each new release is asked for on time.
Sources
- Late payment consultation: time to pay up, government response (24 March 2026). Department for Business and Trade, GOV.UK.