The retention limit, and when deductions should stop
It is a single line in the contract particulars that many people never fill in and rather more never check.
QScope Team · 17 December 2025 · 4 min read
Some contracts state a maximum retention: a cash figure, or a percentage of the contract sum, beyond which no further deduction is made however much work is subsequently certified.
Where it exists, it is a hard stop. Deducting past it is over-deduction, and the excess is simply money withheld without contractual basis.
Why a cap exists at all
Because retention as a straight percentage grows with the works. On a job where variations add thirty per cent, the retention grows by thirty per cent too, even though the risk of defects has not necessarily risen in proportion.
A cap fixes the employer’s security at a level agreed when the parties knew what the job was, and stops it inflating with an account that nobody anticipated.
Where the cap bites in practice
On remeasured contracts and on jobs with substantial provisional sums, where the final value can exceed the contract sum by a wide margin. On a fixed-price job with few changes it rarely comes into play at all, which is part of why it gets overlooked.
Checking whether one applies
Read the contract particulars for a retention limit, a maximum retention, or a cap expressed as a percentage of the contract sum. If the entry is blank, there is usually no limit and retention accrues on everything certified.
Where a limit is stated, calculate what it is in cash at the start and note it. A limit expressed as a percentage of the contract sum does not move when the account does, which is the whole point of it.
What happens at practical completion
The half release applies to what is held, whether or not the cap was reached. If the cap was reached, half of the capped figure is released and the remainder is held at the reduced rate up to half the cap.
That is straightforward arithmetic and it is worth writing down at the time, because it is the sort of calculation that gets reconstructed a year later from a figure nobody can explain.
The reconciliation
At final account, retention held should reconcile to the certificates that produced it: cumulative gross value, at the rate applicable at each stage, less releases, subject to any cap. If it does not reconcile, one of those elements has been applied wrongly, and it is worth finding out which before the release is due.
QScope calculates retention cumulatively against the works valued, so what is held is always traceable to the certificates that produced it.