Can a contractor keep my deposit if I cancel the work?

Usually, yes — but only a reasonable amount tied to their actual losses, not the whole deposit as a blanket penalty. A contractor can typically deduct a cancellation fee, labour costs up to the point you cancelled, the cost of materials that can't be reused or returned, and any genuine loss of profit from having set aside the time slot for your job. What they can't do is simply pocket a disproportionate deposit that bears no relation to what cancelling actually cost them.

What a contractor can reasonably deduct

If you think the amount withheld or the cancellation fee is out of proportion to these actual costs, you can negotiate with the business directly — there's no fixed formula, so it comes down to what's reasonable given what was genuinely lost.

The 14-day cooling-off right — check where you agreed the work

If you arranged the work somewhere other than the trader's business premises — they came to sell it to you at your home, or you agreed entirely online or by phone — you generally have a 14-day cooling-off period to cancel and get a refund. Two scenarios within that period matter:

• You asked them to start work early, during the cooling-off period, and they gave you the required cancellation information first: if you then cancel, you'll owe a proportional amount based on how much was actually completed — not the full price.
• They started work during the cooling-off period without your explicit approval to begin early: you're entitled to cancel and get a full refund of everything paid, regardless of how much work they've done.

This cooling-off protection doesn't generally apply if you visited the trader's own premises (like a showroom) and arranged the work there — in that case, ordinary contract cancellation rules apply instead.

Cancelling before any work has started

If work hasn't begun yet, you'll usually still need to negotiate with the business, since a contract can form as soon as you agree to the work (verbally or in writing), even before a tradesperson arrives. Reasonable deductions can still apply — a cancellation fee or lost-profit claim — but there's nothing for labour or materials yet, so the deduction should be smaller.

What to do if a contractor withholds too much

1. Ask for an itemised breakdown of exactly what they're deducting and why.
2. Compare it against the categories above — labour actually done, materials actually used, a genuine lost-profit claim.
3. Check whether the cooling-off period applies to your situation, since that changes your position significantly.
4. If the figure still seems disproportionate, propose a specific alternative amount in writing and explain your reasoning.
5. If you can't reach an agreement, small claims court is available for amounts up to £10,000 in England and Wales (£3,000 in Scotland and Northern Ireland).

Related questions

• Can a builder charge me more than the agreed quote?
• Can I refuse to pay the final invoice if the work is unfinished?
• Can a builder start additional work without asking me first?

Official sources

• Citizens Advice — Cancelling building or decorating work
• Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013