Deposits for UK trade jobs: amounts and invoices

The short answer

Ask for a deposit that reflects genuine upfront commitments and the job’s payment stages, rather than a standard percentage copied from someone else. Agree what it covers, when it is due and how cancellation works. Invoice it clearly, confirm receipt, credit the final balance and check VAT timing if registered.

*By Kamal Leadbitter, Founder. Last reviewed November 2026.*

How much deposit should a trade or service business ask for?

There is no useful single percentage for every job. A short visit with little outlay is different from an installation involving special-order materials, hired equipment and several days reserved in the diary. Work out the exposure first, then discuss a payment plan that makes sense to both sides.

My starting point is simple: explain what the advance payment is funding. Customers can assess “this covers the supplier payment needed before delivery” more easily than “that is just our policy”. A clear reason does not guarantee agreement, but it makes the conversation more practical.

List the costs you must commit before the first sensible payment milestone. Then consider whether those costs can be reduced, delayed or split. Asking the customer to finance the entire contract early is not the only way to protect cash flow.

A useful calculation includes:

Materials that must be paid for before work starts.
Agreed specialist or equipment booking costs.
Other genuine commitments made specifically for the job.
Payments already available through an agreed first stage.
The amount you can responsibly fund within your business.

For an illustrative example, a £2,000 job might involve a £400 supplier commitment before attendance. Discussing an advance payment linked to that commitment can be more meaningful than automatically asking for half. These figures are not market prices, recommended percentages or a rule about what is legally recoverable.

The right commercial amount and the amount you could retain after cancellation are different questions. Do not treat your cash-flow calculation as permission to keep the money in every circumstance. Consumer rights, fairness and the contract still matter.

What is the difference between a deposit and a part-payment?

In everyday conversation, a deposit usually means money paid in advance to confirm a booking or fund an early commitment. A part-payment means money paid towards the total price. A deposit credited against the job is also part of that overall price.

The label is not enough to establish what happens if work is cancelled. Write down the purpose, amount, payment deadline, refund arrangements and credit against the contract total. Calling a sum a “booking fee” instead does not automatically take it outside consumer protection or VAT rules.

A stage payment is tied to an agreed point in the job, such as completion of a defined phase. Describe a milestone customers can recognise. “Second payment when required” invites disagreement; a specific completion event or agreed date is easier to understand and administer.

Keep genuinely refundable security money distinct from an advance towards the price. These arrangements can have different accounting consequences. If you hold money for more than one purpose, have the terms and tax treatment checked rather than combining it into one vaguely labelled transaction.

What should the quote say before you ask for payment?

Put the whole payment plan in the quote or contract before the customer accepts. The customer should know the total price or calculation method, what is included, the advance amount, later milestones and the final balance terms. Explain how changes will be approved.

For example, use a structure such as: “Advance payment towards the agreed job total, payable before the stated supplier order is placed; credited against the total contract price.” Add the amount and dates, together with appropriate cancellation information. This is an example of clear wording, not a complete legal clause.

Describe what happens if you cannot carry out the work, if materials are delayed, or if either party requests a change. Do not bury important terms in a link sent only after money arrives. The payment request should match the agreement already made.

Where the customer is a consumer, have standard terms checked for fairness. GOV.UK’s Competition and Markets Authority guidance explains that a business should not use unfair cancellation terms or keep more than it is entitled to. “Non-refundable” in bold is not a substitute for a lawful, fair arrangement. 1

What cancellation rights apply to contracts agreed at a customer’s home?

Many consumer contracts agreed at home are off-premises contracts under the Consumer Contracts Regulations. Distance contracts can also carry cancellation rights. This is not the same as saying every trade contract has an identical cooling-off period: how the agreement was made and what it covers matter.

For covered service contracts, the cancellation period normally ends 14 days after the day the contract is made. The consumer does not need to give a reason. GOV.UK explains the information and cancellation requirements for doorstep selling, including the need to explain deposit conditions and provide cancellation information. 1

Give the required pre-contract information clearly and provide confirmation in the appropriate durable form. For an off-premises contract, paper is the default unless the consumer agrees another durable medium. Include the cancellation instructions and model cancellation form where required, rather than relying on a verbal explanation.

Failing to give the required cancellation information can extend the cancellation period by up to 12 months. This is why a signature saying “deposit paid” is not enough. Keep evidence of the information supplied and when the consumer received it.

The regulations have exclusions and exceptions. For example, contracts for constructing new buildings are excluded, while ordinary extensions are not excluded on that basis. Certain low-value off-premises contracts are outside the relevant rules. Check the precise facts, rather than using those exceptions as a general exemption for building work.

Contracts involving both goods and services can need closer analysis, because cancellation timing and exceptions may differ. Do not automatically apply the service-contract timetable to every supply-and-fit arrangement. Bespoke goods do not make all associated work exempt by default.

Can you start during the cooling-off period?

For a covered service contract, starting early requires the consumer’s express request. With an off-premises contract, that request must be on a durable medium. Keep it separately identifiable in your paperwork instead of assuming an appointment date or deposit payment proves the request.

If the consumer then cancels during the period, a proportionate charge for services already supplied may be payable only where the applicable information and express-request requirements have been met. Simply buying supplies does not automatically entitle you to retain the entire advance payment. The regulations set out the conditions. 2

A consumer loses the service cancellation right following full performance only where the required prior express consent and acknowledgement of that consequence have been obtained. Starting work alone does not end the right. Have your early-start wording reviewed so it records the required choices accurately.

There is a specific exception for a visit expressly requested for urgent repairs or maintenance, but it is limited. Additional services and goods beyond what is necessary can remain covered. A leaking pipe does not automatically make every extra improvement ordered during that visit exempt.

If the paperwork is not ready, consider booking outside the cancellation period rather than improvising consent. For mixed contracts, unusual commitments or disputes, get trading standards or legal advice before deciding what to charge or retain.

How do you invoice a deposit clearly?

Use a unique invoice reference and identify the accepted quotation, customer and job address. Describe the payment as an advance towards the agreed contract price. Include the amount due, payment deadline and payment details, with the correct tax information where applicable.

Do not describe an unpaid request as a receipt. An invoice asks for payment; a receipt confirms payment has arrived. A pro forma can be useful in some workflows, but it is not a VAT invoice and should not be presented as one.

The deposit document should make the later balance understandable. State the overall agreed price or refer clearly to the accepted quotation and payment schedule. Avoid wording that makes the advance look like an extra charge added on top of the agreed total.

GOV.UK sets out required invoice details, including a unique identification number, business and customer information, description, dates and amounts. Check any additional requirements for your business structure and VAT status. A bank account number alone is not an adequate invoice. 1

What should the receipt and final invoice show?

After money arrives, record the payment date, amount, method and invoice reference. Send a receipt or paid confirmation that identifies the job. If the customer pays less than requested, confirm the actual amount received and the outstanding deposit amount, not the intended payment.

Keep the deposit attached to the same job throughout the process. If there are several stages, a running statement can show invoices raised, payments received and the balance. That prevents a later account from looking like a fresh demand for money already paid.

On the final account, show the full job value and approved variations, then reconcile previous invoices and payments without duplicating them. Your accounting workflow may issue a balance-only invoice or a final reconciliation; either way, the customer should see exactly what remains payable.

Check the VAT figures against earlier documents. Do not calculate VAT again on the full contract total while leaving the earlier advance invoice’s VAT unadjusted. Use your accounting process to reconcile the full supply, previous amounts and outstanding balance correctly.

When does VAT become due on a deposit?

For a VAT-registered business receiving an advance towards a taxable supply, HMRC says the tax point is the earlier of issuing a VAT invoice for that advance or receiving the payment. Include the VAT due in the return covering that tax point. Do not assume VAT waits until completion. 3

If another advance balance is paid before supply, that can create a further tax point. Keep the dates accurate and ensure documents do not duplicate the same tax. Construction stage-payment arrangements can have specific rules, so check the arrangement with your accountant where needed.

If you are not VAT registered, do not add a VAT charge simply because the money is called a deposit. If the supply has an unusual VAT treatment, establish that treatment before issuing the document. The deposit label does not determine the rate.

Forfeited advance payments and genuinely returnable security deposits can be treated differently. Do not assume that a cancelled job automatically removes VAT already accounted for. If you refund money or change the supply, use the appropriate accounting adjustment and supporting documents.

Frequently asked questions

Is there a standard deposit percentage for UK trade jobs?

No single percentage suits every job. Base the request on genuine commitments, the payment schedule and the risk involved. Explain the amount before acceptance. A deposit that works for a special-order installation may be unnecessary for a short service visit with minimal upfront cost.

Can I make every deposit non-refundable?

No. A label cannot override statutory cancellation rights or make an unfair term enforceable. Set out fair terms and assess what is lawfully due in the circumstances. The amount received upfront is not automatically the amount you may retain if the customer cancels.

Does paying a deposit waive the cooling-off period?

No. Payment alone does not remove an applicable cancellation right. Early service provision requires the relevant express request and information, and full performance ends the right only where the required consent and acknowledgement conditions are met. Keep an appropriate written record.

Should I issue both an invoice and a receipt?

Issue a clear payment request before payment and confirm what you actually receive afterwards. A paid invoice can provide that confirmation if the details are clear. The important distinction is that an unpaid invoice must not falsely suggest money has already arrived.

Do I wait until the final invoice to account for deposit VAT?

Normally not. For a taxable advance payment, HMRC identifies the tax point as the earlier of issuing its VAT invoice or receiving payment. Reconcile that advance when completing the final account so neither the payment nor its VAT is counted twice.

What should you do next?

Make the scope, payment stages and balance easy to understand before work starts. Try SaidToPaid free and use the free sector resource pack to put a clearer quoting and invoicing routine in place.

Sources and photograph

Illustrative photograph by Josh Marty on Unsplash, not a SaidToPaid customer case study.

How much deposit should you ask for on a UK trade job?