Paying Tradespeople Safely — Deposits, Stage Payments & Protection

This is the single most important principle of safe payment. At every stage of a project, the amount you have paid should not exceed the value of the work that has been properly completed. This gives you leverage: if a builder stops work, you have not over-paid, so you are not in a worse financial position than the work justifies. If you have paid ahead of the work — which happens when builders ask for large upfront payments — you lose this leverage. The builder has been paid and you have to pursue them for refund, which is difficult and expensive.

A deposit of 10–20% of the total contract value is standard for most trades on larger jobs. This covers initial material orders and confirms the booking is serious. For small jobs (under £1,000), no deposit is normal. For speciality materials (bespoke windows, made-to-measure kitchens, specialist stone), a higher deposit corresponding to the actual material cost may be justified. A request for 50% or more upfront — without specific justification for material orders — is a red flag. A request for payment in full before starting is, for most domestic work, unjustifiable.

For building works, payments should be tied to completed stages — not to calendar dates. "Payment of £10,000 on 1 September" is dangerous if the work due to be completed by 1 September has not actually been done. "Payment of £10,000 on completion of the first fix, verified by a site visit" gives you protection. The stages should be specified in the contract and match the actual construction sequence. A project manager or architect can certify when each stage is genuinely complete, providing independent verification before you release payment.

Retention is a percentage of the final payment (typically 5–10%) that is withheld by the client until snagging is complete and the defects liability period has run. This is standard practice in commercial construction and entirely appropriate for significant residential projects. A builder who refuses to accept a retention is a concern — it suggests they do not intend to return for snagging or defects. A retention of 5% on a £40,000 project is £2,000 — a modest amount but a meaningful incentive for the builder to complete the snagging list properly.

Paying by credit card for amounts over £100 gives you protection under Section 75 of the Consumer Credit Act 1974. If the trader fails to deliver the service as agreed, or goes into administration, you can claim a full refund from your credit card company — even if the trader cannot pay. This protection applies to the proportion of the payment made by credit card, for payments between £100 and £30,000. For this reason, paying at least some part of the deposit or first stage payment by credit card is strongly recommended for any significant project. Check that your credit card does not charge a foreign transaction fee before using it.

Most large payments are made by bank transfer. Use a meaningful payment reference (job address and date). Keep the bank transfer confirmation as proof of payment. Before making any large transfer, confirm the bank details directly with the trader — ideally in person or by phone (not by email, which can be intercepted and the account details changed in a fraud called "push payment fraud"). If you receive an email asking you to pay to a new or different account, call the trader on a number you have independently verified before transferring any money.

A proper invoice from a VAT-registered business must include: the trader's name and address; their VAT registration number; an invoice date and unique invoice number; a description of the services provided; the amount charged excluding VAT; the VAT amount; and the total including VAT. A legitimate, VAT-registered trader provides these without being asked. If a trader is not VAT registered (which is legal if their turnover is below the £90,000 threshold), invoices should still include their name, address, and a description of the services. Keep all invoices — you need them for insurance claims, property sales, and warranty claims.