Stage Payment Schedules: Recommended Milestones by Job Type and Legal Framework

Quick Answer: A stage payment schedule splits a job's price into milestone payments tied to defined points of progress (deposit → first fix → second fix → completion → retention release), protecting your cash flow without front-loading risk onto the customer. For domestic work the schedule is a contractual term you agree in writing before starting; for construction contracts the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) gives a statutory right to interim/stage payments and a payment-notice regime on most "construction operations" over 45 days. Always put the schedule in the written contract, link each stage to objective completion criteria, and never let your work-done outrun your payments-received.

Summary

Cash flow kills more trade businesses than lack of work. A tradesperson who completes a £20,000 job and only invoices at the end has funded £20,000 of labour and materials out of their own pocket for weeks — and carries the full risk if the customer can't or won't pay at the end. Stage payments solve this by matching money in to work done, so you're never more than one stage "out of pocket". They also protect the customer, who only pays for progress they can see rather than handing over a lump sum up front.

The art of a good schedule is choosing milestones that are objective, visible, and roughly cash-neutral — points where the customer can verify what they're paying for, and where the value of work done plus materials on site is at least covered by payments received to date. A vague schedule ("50% to start") invites disputes; a precise one ("£X on completion of first-fix plumbing and electrics, inspected") doesn't.

This guide gives recommended schedules by job type (small jobs, kitchens/bathrooms, extensions, full refurbishments), explains the legal framework — the Construction Act payment rights, deposit protection, and consumer law — and shows how to write a schedule that holds up if a dispute reaches adjudication or the small claims court. For deposits specifically see deposit requests; for the end-of-job money see retention payment guide.

Key Facts

Quick Reference Table

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Job Type Typical Stage Schedule
Small job (1-3 days, < £2k) Often nil deposit; payment on completion. Materials deposit if bespoke
Medium job (£2k-£10k) 20-30% deposit (materials) → balance on completion (or 50/50)
Bathroom / kitchen (£8k-£25k) Deposit (materials) → first fix → units/suite fitted → completion → small retention
Single-storey extension (£40k-£90k) Deposit → DPC/slab → walls to plate → roof watertight → first fix → plaster → second fix → completion → retention
Full refurbishment Deposit → strip-out → first fix → plaster → second fix → decoration → completion → retention
Long contract (>45 days, non-residential) Monthly interim payments under Construction Act payment regime

Detailed Guidance

Why Stage Payments — and Why Not Front-Load

The purpose of a stage schedule is to keep money-in roughly level with work-done-plus-materials-on-site, so neither party carries excessive risk:

The temptation is to front-load — take a big deposit and structure early stages to exceed the work actually done. Resist it. Front-loading destroys the customer's protection, is a red flag that worries good customers, and is hard to defend if challenged. The honest principle is that at any point, the payments received should roughly equal the value of completed work plus unfixed materials on site — never far ahead of it.

Recommended Milestones by Job Type

Small jobs (1-3 days): usually no deposit; invoice on completion. Take a materials deposit only where you're buying bespoke or non-returnable items (made-to-measure, special order) so you're not out of pocket if the customer cancels.

Medium jobs (£2k-£10k): a deposit of 20-30% to cover materials and mobilisation, balance on completion. For jobs at the upper end, a midpoint stage ("50% on completion of [defined point]") smooths cash flow.

Bathrooms and kitchens (£8k-£25k): the natural milestones follow the trade sequence:

Single-storey extension (£40k-£90k): the classic milestone roof:

Full refurbishment: strip-out → first fix → plaster → second fix → decoration → completion → retention.

For larger jobs, tie milestones to Building Control inspection stages where relevant (foundations, DPC, drains, structure) — these are objective, third-party-verified points that both parties trust.

Writing Milestones That Don't Cause Disputes

A schedule fails when stages are vague or tied to dates rather than progress. Each stage should be:

Put the whole schedule in the written contract the customer agrees before work starts. A schedule sprung mid-job, or only verbally agreed, is weak if it comes to a dispute. See contracts and written contract guide.

The Legal Framework

The Construction Act (HGCRA 1996, as amended 2009): for most "construction operations", a contract longer than 45 days must provide for stage/interim payments, and the Act imposes a payment-notice regime: the payer must issue a payment notice stating what's due, and a valid "pay less notice" if they intend to pay less — fail to serve notices and the applied/notified sum becomes the notified sum that must be paid (the basis of "smash and grab" adjudications). The Act also gives a right to adjudication to resolve disputes quickly and a right to suspend for non-payment.

The residential occupier exemption: a contract with a residential occupier — a homeowner having construction work done on their own home to live in — is excluded from the Act's payment and adjudication provisions (HGCRA s.106). This means most domestic jobs are not automatically covered, so your contractual payment schedule is what governs. You don't get the statutory notice regime or adjudication by default — making a clear written schedule even more important. (Some standard domestic contracts voluntarily incorporate adjudication/payment terms.)

Consumer law: the Consumer Rights Act 2015 requires services to be performed with reasonable care and skill, within a reasonable time, and for a reasonable price if not agreed. A customer can lawfully withhold payment for work not done to that standard — which is exactly why stage payments should be tied to satisfactory completion of defined work. Distance/off-premises contracts also carry cancellation rights (consumer rights).

Late payment and recovery: between businesses (e.g. you as a subcontractor), the Late Payment of Commercial Debts (Interest) Act 1998 gives statutory interest and compensation. For consumer customers, recovery is via the contract terms and, if necessary, the county court (small claims for sums under £10,000). See payment chasing and getting paid.

Deposits and Retention Within the Schedule

The deposit is the first stage payment and should be sized to cover what you'd lose if the customer pulled out before you started — primarily non-returnable materials and mobilisation. 10-30% is normal; a deposit much larger than your at-risk costs is hard to justify and worries customers. Where you buy a large bespoke item (kitchen units, a special-order suite), it's reasonable for the deposit to cover that specific order. See deposit requests.

Retention is the mirror image at the end: a small percentage (commonly 2.5-5%) the customer holds back at practical completion and releases after a defects/snagging period, giving them comfort that you'll return to fix any snags. On domestic work retention is optional and negotiable; on larger jobs it's common. Make the release trigger and timescale explicit so the final payment doesn't drift. See retention payment guide.

Frequently Asked Questions

How much deposit should I ask for?

Typically 10-30%, sized to cover your at-risk costs if the customer cancels before work starts — mainly non-returnable/bespoke materials and mobilisation, not pure profit. For jobs with a large special-order item (kitchen, bathroom suite), it's reasonable for the deposit to cover that order. Asking for a deposit far larger than your at-risk costs is hard to justify and tends to put good customers off.

Are stage payments a legal right?

For most "construction operations" lasting more than 45 days, yes — the Construction Act (HGCRA 1996, amended 2009) gives a statutory right to stage payments and a payment-notice regime. BUT contracts with a residential occupier (a homeowner having work on their own home) are exempt from those provisions, so on most domestic jobs your contractual schedule is what governs. Always agree the schedule in writing before starting.

What happens if a customer won't pay a stage payment?

First, check you served any required notice/invoice and that the stage was satisfactorily completed (the customer can withhold for defective work under the Consumer Rights Act 2015). If the work is sound and payment is genuinely overdue, you can suspend further work (the contract should reserve this right) and pursue the debt — via the contract terms and, if needed, the county court small claims track for sums under £10,000. Keep your stage sign-offs and records; they're your evidence. See payment chasing.

Should I tie stages to dates or to progress?

Always to progress, never to dates. A date-based stage ("£X on 1 June") becomes due even if the job is delayed by weather, the customer's decisions, or supply issues — and is unfair and disputable. A progress-based stage ("£X on completion of first fix") is objective: the customer can verify it and only pays for work actually done. Tie milestones to visible, verifiable events, ideally Building Control inspection points on larger jobs.

Can I charge VAT on each stage payment?

Yes, if you're VAT-registered. Each stage payment (or the invoice/request for it) creates a tax point, and you account for VAT on that payment in the relevant period. State clearly in the contract whether stage figures are inclusive or exclusive of VAT to avoid disputes. See vat for trades.

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