Retention invoice template UK (2026): holdback release, CIS and VAT
Retention invoice UK, short answer: a retention invoice bills the release of money previously held back from certified or agreed sums — not a fresh interim valuation and not a deposit. Who pays is set by the contract (main contractor or client). CIS may apply when a CIS contractor pays you for construction operations — soften with HMRC’s CIS overview and your accountant. A private householder paying for work on their own home is usually not CIS and is never treated as the CIS contractor for that home. If you are VAT-registered (threshold £90,000), show VAT correctly on taxable lines; if you are not registered, do not charge VAT.
Use this page when the PDF is a holdback release (for example “5% retention release — practical completion” or “half retention after defects period”). It is not an interim progress / stage bill, not a deposit taken before work starts, and not the how-to calculator at calculate retention payments (that sister explains the maths; this page is the invoice template). Sister pages for stage payment, variation and snagging may still be planned — link only where useful. Figures below are illustrative only. Need the PDF now? Open the free invoice generator (Free: 5 invoices; Pro £7.99 / Pro+ £12.99).
Who pays, CIS and VAT on a retention invoice
Start with who is releasing the holdback and which release tranche the PDF covers. Retention billing is about money already earned but held, not a CIS shortcut.
Who pays you | Typical retention job | CIS? | VAT if registered |
|---|---|---|---|
Private householder | Domestic holdback release on their own home | Usually no — never treat them as CIS contractor for own home | Often 20% on ordinary domestic works — soften Notice 708; do not invent 0% |
Main contractor / CIS contractor | PC or end-of-defects retention release on construction ops | May be in CIS base when ops are in scope — soften with HMRC / accountant | Normal VAT, or reverse charge only when eligible contractor tests met — never on a householder |
Developer / client QS | Staged retention release against contract | Depends whether the payer is a CIS contractor for construction ops | Show net / VAT / gross if registered |
Progress / interim (not this page) | Work completed to a named stage | Same CIS tests as the trade work — use progress sister | Same VAT rules |
CIS rates (0% / 20% / 30%) sit with the contractor when CIS applies — InvoiceAdept does not decide status and does not file CIS300. VAT threshold is £90,000. InvoiceAdept does not file VAT returns, MTD updates or Self Assessment.
Retention vs progress vs deposit vs calculate-retention
Use this page when the deal is a release of held retention. Sister pages stay for sister intents.
Billing shape | When it fits | Invoice cue |
|---|---|---|
Retention release (this page) | Holdback previously deducted is now due | Retention % / amount, release trigger (PC / defects end), not a full interim valuation |
Work completed to a milestone on a larger job | Stage name + % or valued amount; cumulative to date if useful | |
Upfront sum before (or as) work starts | Deposit % or fixed sum; credit later on progress / final | |
How to work out holdback maths | Calculator / how-to — not the PDF field list | |
Final account without retention line | Closing balance with no holdback release | Final account narrative — not this template |
If the PDF is only a booking deposit, use the deposit sister. If you are billing an interim stage, use progress. If you need the percentage maths only, use calculate-retention. Do not invent CIS on a householder retention release.
What a UK retention invoice must include
Field | Always? | Retention notes |
|---|---|---|
Your name or business name | Yes | Match Self Assessment / Companies House |
Your address and contact | Yes | Email helps QS / AP queries |
Customer name and address | Yes | Ltd = registered name; add site address if different |
Unique sequential invoice number | Yes | e.g. INV-RET-2026-0003 |
Invoice date | Yes | Date of issue |
Tax point / supply date | If VAT-registered and different | Useful when release date differs from issue date |
Description of release | Yes | Site, retention %, release trigger, amount; “retention release — not interim progress” |
Contract / order / prior invoice refs | Strongly recommended | Link to the valuations that created the holdback |
Payment terms | Yes | Due on receipt / 7 / 14 / 30 days (or contract release cycle) |
VAT number, rates, VAT amount | If VAT-registered | Show net, VAT and gross |
CIS UTR / deduction narrative | When a CIS contractor pays you within scope | Omit on true householder PDFs |
Bank details | Strongly recommended | Sort code and account name matching the invoice |
Never reverse-charge a private householder. Never invent CIS on a domestic own-home bill.
Copy-paste retention release example (illustrative)
Scenario: sole trader electrician invoices a main contractor for half retention release after practical completion on a commercial fit-out. CIS registered at 20%. Not VAT-registered. Contract sum £12,000; 5% retention = £600 held; this PDF releases half (£300) at PC (illustrative).
Line | Qty | Unit | Net |
|---|---|---|---|
Retention release 1/2 — practical completion, Unit B, week ending 12 Sep 2026 (2.5% of contract; half of 5% holdback) | 1 | Release | £300.00 |
Prior progress / valuations | Already billed — not re-billed here | ||
Gross subject to CIS (this release) | £300.00 | ||
CIS deduction @ 20% | −£60.00 | ||
VAT | Not registered — net only | ||
Amount payable by contractor | £240.00 |
Narrate on the PDF: “Retention release for [trigger] at [site]. Not a progress / interim valuation. CIS registered 20%. UTR on file.” Keep the release separate from stage bills so AP can match holdbacks.
CIS, VAT and reverse charge cues
Topic | Practical rule |
|---|---|
Retention for a CIS contractor on construction ops | May be in CIS base — soften |
Householder own-home retention release | Usually no CIS; never treat them as CIS contractor |
VAT threshold | £90,000 |
Domestic reverse charge | Never on a householder; contractor tests only |
Deemed contractor | £3 million construction-spend framing — not £1 million |
Deposit vs retention | Deposit is upfront; retention is holdback already earned |
InvoiceAdept | Does not file CIS300, VAT, MTD or Self Assessment |
Agreeing retention before you start
Confirm retention percentage, release triggers (practical completion, end of defects), who certifies release, and whether CIS will apply before you start. Put the holdback terms in the quote / contract so each release PDF can cite the same labels.
Shape | How to show it on the PDF |
|---|---|
% of contract sum held | “5% retention on £X = £Y held” |
Half at PC, half after defects | Two separate release invoices with clear triggers |
Full release at one date | One line: full retention release + trigger date |
Progress now, retention later | Progress sister for interim; this page when releasing holdback |
Weak: “Retention as agreed £300.” Usable: “Retention release 1/2 at PC Unit B week ending 12 Sep 2026 — half of 5% on £12,000 = £300 net, CIS 20%, not VAT-registered, not an interim progress bill.”
Payment terms and getting paid
Main-contractor retention often follows a certificate / AP cycle (14 or 30 days after the release trigger). Householders often prefer 7 days or due on receipt once the defects window ends. Put bank details on the PDF. Soften B2B late-payment interest with the contract and your accountant.
Common mistakes on retention invoices
Mistake | Fix |
|---|---|
Vague “retention as agreed” lump | Name the %, site, release trigger and prior valuation refs |
Calling a deposit a retention invoice | Use deposit until money was earned and held |
Billing an interim stage as “retention” | Use the progress sister for work-done stages |
CIS narrative on a householder retention PDF | Remove CIS lines when the householder pays |
Charging VAT when not registered | Net only until registered |
Mixing release with a new variation line | Keep holdback release separate from extras / VO lines |
Reverse-charging a householder | Never — reverse charge is contractor-to-contractor when tests met |
Frequently asked questions
Is a retention invoice the same as a progress invoice?
No. Progress / interim bills work completed to a stage. A retention invoice releases money previously held back.
Does CIS always apply to retention releases?
No. CIS may apply when a CIS contractor pays you for construction operations. Private householders on their own home are usually outside CIS — soften with HMRC / your accountant.
Can I put CIS deduction lines on a householder retention invoice?
Usually no. If a private householder pays the release on their own home, leave CIS narrative off the PDF.
What VAT threshold should I use in 2026?
£90,000. Soften registration with your accountant.
How is this different from the calculate-retention page?
That sister is the how-to / maths. This page is the invoice template for the PDF you send.
How is this different from a deposit?
A deposit is usually upfront before (or as) work starts. Retention is holdback on sums already earned.
Do I charge VAT on retention if I am not VAT-registered?
No. Net only until you are registered.
Where can I build the PDF quickly?
Use the InvoiceAdept free invoice generator — Free covers 5 invoices; Pro is £7.99 and Pro+ £12.99 when you need more.
Next step: build the retention invoice
Name the release trigger, keep householder vs contractor facts straight, show CIS arithmetic only when due, and show VAT only if registered (£90,000 threshold). Open the free invoice generator, paste the lines from the worked example shape, and send when the release window opens. InvoiceAdept does not file CIS300, VAT returns, MTD or Self Assessment for you.
Last reviewed: 17 September 2026.
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