Construction retention is money withheld from interim payments under the contract and released at stated stages. An invoice or application should show the gross value, retention deducted, amount due and retention held to date.
Use this 2026 template only where the subcontract or contract includes retention.
This is general information, not legal advice. The rate, cap, release dates and notice process come from the contract.
Retention invoice template
Subcontractor: [Legal name]
Contractor: [Legal name]
Project/site: [ ]
Subcontract/PO: [ ]
Invoice/application: [ ]
Period: [ ]
| Retention summary | Amount |
|---|---|
| Gross value this period | £[ ] |
| Retention at [ ]% | -£[ ] |
| Amount before VAT and CIS | £[ ] |
| Retention held previously | £[ ] |
| Retention held to date | £[ ] |
Apply VAT and CIS according to the correct rules after establishing the contract value and retention treatment.
Worked example
A subcontract values £20,000 of work this period and withholds 5% retention.
| Calculation | Amount |
|---|---|
| Gross value | £20,000 |
| Retention at 5% | -£1,000 |
| Value before tax treatment | £19,000 |
If £2,500 was already held, the retention account becomes £3,500.
Retention release template
When a release event is reached, issue the required application or invoice with a clear reference.
| Release summary | Amount |
|---|---|
| Retention held | £[ ] |
| Percentage released | [ ]% |
| Amount released now | £[ ] |
| Retention remaining | £[ ] |
| VAT treatment | £[ ] |
| CIS deduction if applicable | -£[ ] |
| Cash due | £[ ] |
State the contractual event, such as practical completion or expiry of the defects period, and attach the supporting certificate or confirmation.
First and second release
Many contracts release retention in two parts, but do not assume that structure. Read the specific subcontract.
Track:
- original retention rate
- cap
- retention on each valuation
- cumulative balance
- first release event
- second release event
- notices and due dates
Retention is not a discount
The gross value of the work remains visible. Retention is a temporary deduction under the payment terms.
Do not reduce each line’s price so the retention disappears. The customer statement and final account need a traceable held balance.
Valuations and applications
Retention belongs in the cumulative valuation as well as the current payment.
Use the construction valuation template to show work to date, prior certification and the amount held.
VAT and CIS
Retention, VAT and CIS interact under specific tax rules. Keep the calculation stages visible and check the current treatment with HMRC or an adviser.
The CIS invoice template shows labour, materials, deduction and net payment. Do not treat retention as materials.
Requesting release
Subject: Retention release application, [site], [subcontract]
Hi [name],
Under [contract clause/reference], £[amount] of retention is due for release following [event] on [date]. The attached application shows the retention held, amount requested and balance remaining.
Please confirm receipt and the payment timetable.
Regards,
[your name]
Retention checklist for 2026
- Does the contract permit retention?
- Is the correct rate and cap used?
- Is the gross value still visible?
- Does the cumulative held balance reconcile?
- Has the contractual release event occurred?
- Is the correct application or invoice being used?
- Are VAT and CIS treatments checked?
- Is the due date recorded?
- Is the supporting certificate attached?
Sendinvo can invoice the agreed release amount and show any CIS deduction. Keep the retention ledger with the contract record and start free when the payment becomes billable.