Construction retention calculator
Retention is the percentage of each certified payment a client keeps back until the work is finished and defects are put right. It builds up with every certificate. Commonly part is released at handover and the balance when the defects period ends, and UAE VAT on it is due at the earliest of payment, an invoice for it, or 12 months after sign-off.
How retention builds and is released
The calculator multiplies the work certified to date by the retention rate in your contract, then splits it into the first release and the balance using the share you enter. Many UAE contracts release half at handover and half after the defects liability period, but your contract decides. SupaJack Construct records the two releases as separate tranches, each with its own application, certificate and invoice.
| Point in the project | Certified to date | Retention held | Released |
|---|---|---|---|
| 25% complete | 1,200,000.00 | 60,000.00 | 0.00 |
| 62% complete | 2,976,000.00 | 148,800.00 | 0.00 |
| 100% complete, handover | 4,800,000.00 | 240,000.00 | 120,000.00 (first half) |
| End of defects period | 4,800,000.00 | 120,000.00 | 120,000.00 (balance) |
VAT on retention
The FTA's Real Estate VAT guide says there are no special date-of-supply rules for retention: the continuous-supply rules of Article 26 apply. VAT on the retention is due at the earliest of the retention being paid, a tax invoice being issued for it, or 12 months after the work is signed off as complete. Use the payment certificate calculator to see both ways of handling it on a progress invoice.
Tracking retention without a spreadsheet
In SupaJack Construct retention held is the sum of what each certificate withheld, never a typed running total, and each release is tied to the handover or end of defects that justifies it. See how the money moves or use the gratuity calculator, overtime calculator, annual leave calculator, unpaid leave calculator, payment certificate calculator and retention calculator.
Worked example
On a AED 4,800,000 contract with 5% retention and 62% of the work certified, the client holds 4,800,000 × 62% × 5% = AED 148,800. At completion the full AED 240,000 is held. If half is released at handover, AED 120,000 is applied for then and the remaining AED 120,000 after the defects period.
Questions people ask
What is retention in construction?
The part of each certified payment the client holds back as security until the work is complete and defects are fixed.
What retention percentage is usual?
The contract sets it. A fixed percentage of each certificate, often with a cap, is common.
When is retention released?
When the contract says. Often half at handover and the balance after the defects liability period.
Is VAT payable on retention?
Yes, at the earliest of its payment, a tax invoice for it, or 12 months after the work is certified complete.
Is retention included in the progress invoice?
Under the default approach the invoice carries VAT on the full certified value and retention is held from payment; with deferral, retention and its VAT go on the release invoice.
Can a client keep the retention?
If defects are not put right, the contract may let the client use the retention to fix them.
Is retention a debt in the contractor's accounts?
It is money owed to the contractor, usually tracked as a separate retention receivable until released.
Does the retention calculator include VAT?
No. It shows retention before VAT; use the payment certificate calculator for VAT.
Can retention be replaced by a bond?
Some contracts allow a retention bond or guarantee instead of cash retention; check your contract.
How does SupaJack Construct track retention?
As the sum of what each certificate withheld, released in tranches each tied to its own application and invoice.