Can I keep the deposit if the client cancels?

Only up to your genuine costs incurred (materials ordered, planning time, lost slot). In the EU and UK, terms that let you keep a full deposit as a penalty are usually unenforceable against consumers.

Should the deposit be refundable?

State the policy in writing before signing. Standard practice: refundable if the contractor can't perform, partially refundable if the client cancels (minus actual costs), non-refundable once materials are ordered.

Do I charge VAT on the deposit?

In the UK, EU, Canada, and Australia — yes. The deposit creates a tax point. Add VAT at your normal rate and remit it in the period received.

Is a deposit and a retainer the same thing?

No. A deposit is credited against a specific project's final invoice. A retainer is a monthly fee for ongoing services (common for consultants and lawyers, unusual for construction).

What if the client wants a payment plan instead of a deposit?

That's [progress billing](/blog/contractor-progress-billing-guide) — perfectly reasonable on larger jobs. Structure as milestone invoices tied to visible completion stages.

Deposit Invoicing for Contractors: When and How Much to Ask For

Deposits protect contractor cash flow and filter out bad clients. Here's how much to ask for, when it's legal, and how to invoice it so it clears without arguments.