IN Brief:
- Build UK tier one contractor members withhold an average 2% from supplier payments.
- Contractors pass an average 74% of client-held retentions into their own supply chains.
- Average contractor payment times have fallen from 45 to 29 days since benchmarking began in 2018.
Build UK has published its first construction retentions benchmark, showing that tier one contractor members withhold an average of 2% from supplier payments and pass much of the retention imposed by clients into their own supply chains.
The data indicates that contractor members withhold an average amount equal to 74% of the retentions held against them by clients. On that measure, the contractors absorb the remaining 26% rather than transferring the entire upstream deduction to their suppliers.
Retentions are sums withheld from interim payments as security against incomplete or defective work, with release commonly linked to practical completion and the end of a defects period. The arrangement protects the payer, but it also removes working capital from contractors and specialists after labour, materials, plant, and overheads have already been funded.
Build UK’s table now records whether a company uses retentions, the average retention rate as a proportion of supplier payments, and the amount withheld from suppliers relative to the amount retained by clients. Those measures sit alongside established figures for payment speed, invoices paid within agreed terms, and invoices paid within 60 days.
The underlying information comes from reports submitted under the Reporting on Payment Practices and Performance Regulations. The UK’s largest companies and limited liability partnerships report every six months, while retention disclosures apply to financial years beginning on or after 1 April 2025.
Not every business in the table has yet completed its first retention disclosure, and Build UK notes that a company’s return can include payments outside its construction operations. The results therefore provide a developing company-level benchmark rather than a complete account of every retention held across the sector.
The new data nevertheless makes a previously opaque practice easier to compare. A headline retention percentage reveals the immediate deduction from supplier payments, while the pass-through measure shows whether a main contractor is withholding more, less, or roughly the same proportion as its own client.
That distinction matters in a tiered supply chain. A contractor that absorbs part of the client retention supports cash flow below it, although it remains exposed to delayed release or upstream insolvency. A contractor that passes the full burden down preserves its own cash position but leaves specialists financing more of the project.
Build UK has published payment-performance benchmarks since 2018. It says the average time taken by contractor members to pay invoices has fallen from 45 days to 29 days, while the proportion paid within 60 days has increased from 82% to 96%.
The retention figures arrive while Parliament considers the Commercial Payments Bill, which includes a proposed prohibition on deducting and withholding retention sums under construction contracts. The legislation also contains wider measures on payment terms, late-payment interest, reporting, and the powers of the Small Business Commissioner.
The proposal is not yet an operating ban. The Government has said the changes will not apply retrospectively and that businesses will receive a transition period, so current contracts and commercial systems cannot be treated as though cash retentions have already disappeared.
Moving away from retentions would require clients and project teams to manage quality through other contractual and operational controls. Inspection regimes, staged acceptance, bonds, guarantees, warranties, insurance, digital records, and prompt defect correction may all carry greater weight, depending on the final legislation and the form of contract.
Those alternatives are not cost-free. Bonds and guarantees consume credit capacity, enhanced inspection requires competent resources, and more detailed acceptance procedures can generate their own disputes when responsibilities and evidence are poorly defined.
For subcontractors, the benchmark adds data to negotiations that have often relied on customary percentages rather than transparent comparison. Businesses can test whether a proposed retention resembles the rates reported by larger contractors and assess the cash-flow exposure alongside payment periods, dispute clauses, and release mechanisms.
Clients and main contractors will also need to understand how retention balances are distributed across live portfolios. A future legal change could affect tender wording, subcontract templates, financial forecasts, security arrangements, and the administration of projects spanning the transition period.
The figures may also expose inconsistencies between published policy and actual practice. Companies that describe themselves as moving away from retentions will have to reconcile that position with reported deductions, while suppliers can compare statements made during procurement with the payment data filed after contracts are awarded.
Build UK’s first release is a baseline rather than a final verdict. As more businesses complete their mandatory disclosures, the benchmark should become more representative and show whether faster payment is being matched by a genuine reduction in cash withheld from companies carrying out the work.
