Kill fees and deposits done fairly (UK freelancers)

Deposits and kill fees exist to answer a real problem: you block out time for a client, turn down other work to do it, and then they change their mind. Without something in the contract, that lost time is simply yours to absorb. Done well, a deposit and a fair cancellation fee share that risk sensibly. Done badly — as a blunt penalty — they can be unenforceable, and worse with consumers than with businesses.

This guide explains how to structure both so they're fair, reasonable, and actually hold up if a client ever pushes back.

A quick note first: TrustSolo isn't a law firm, and nothing here is legal advice — and cancellation terms are an area where the rules genuinely differ between business and consumer clients. For anything high-value or unusual, take proper advice. What follows is the sensible general shape.

Deposits, done fairly

A deposit is a portion of the fee taken up front, before you begin. It does two useful things: it funds the early part of the work, and it's a fair test of how committed a new client really is. Taking one is entirely normal, especially with a new client or a larger project.

The key to a fair deposit is that it's credited against the total fee, not an extra charge on top. The client pays, say, half up front and the balance on delivery — the deposit is simply the first slice of the same fee, not a surcharge. Keep the amount proportionate to the work and the risk; a modest deposit reads as professional, while a very large one up front can put good clients off and, with consumers, invites a fairness challenge.

Be cautious, too, with the phrase "non-refundable." A deposit that you'd keep in full no matter when or why a client pulls out is exactly the kind of blanket term that consumer law treats sceptically — more on that below.

Kill fees, done fairly

A kill fee is what's due if a client cancels partway through a project. Its job is to compensate you for the work you've already done and the time you'd committed and can no longer fill — not to punish the client for changing their mind. That distinction is the whole of "done fairly," and it's also what makes the fee more likely to stick.

A fair kill fee has two features. First, it's framed as what's payable if the client chooses to cancel — a normal commercial term for ending early, not a penalty for a breach. Second, its size reflects something real: the work completed, plus a reasonable amount for time you'd set aside and genuinely can't re-fill at short notice. A kill fee pinned to a real commitment — a minimum number of days booked, say — is on far firmer ground than an arbitrary "50% whatever happens."

The instinct to make it large and unconditional is understandable, but it backfires: the more a cancellation fee looks like a penalty rather than a genuine reflection of your loss, the harder it is to defend if the client ever pushes back on it.

Business clients and consumers are different

This is the part worth getting right, because the same clause can be perfectly fine for a business client and legally shaky for a consumer.

With consumers, cancellation charges are tightly controlled by consumer-protection law. The Competition and Markets Authority's guidance is blunt about it: if a customer cancels, what you keep "must take into account what your business is actually losing as a result. It must not be excessive", and a term saying "no refund is available in any circumstances is likely to be unfair". The statute is behind that: the Consumer Rights Act 2015 lists, among terms that may be unfair, "a term which has the object or effect of requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation." In practice that means a fair consumer cancellation charge reflects your actual, unrecovered loss — taking account of costs you've saved and whether you can fill the slot with someone else — rather than a flat percentage payable in every case. A sliding scale by how much notice you're given (more notice, smaller charge) is a much fairer and sturdier approach than a single fixed figure. Consumers who sign up online also usually have a short statutory window in which they can cancel for any reason.

With business clients the rules are looser — two businesses have more freedom to agree the terms between them — but the same instinct serves you well: a cancellation fee tied to genuine commitment and loss is both fairer and more robust than an arbitrary penalty.

If you're not sure which category a client falls into, the safe default is to write to the stricter, consumer-friendly standard. It's fair to everyone and defensible either way.

Making yours fair — and enforceable

Pulling it together, a few principles keep deposits and kill fees on the right side of the line:

• Credit deposits against the fee; don't treat them as an extra charge or a blanket forfeit.
• Tie the kill fee to something real — work done and genuinely committed time — not a round-number penalty.
• Frame it as cancellation, not breach — "if you cancel, this is payable," a normal term for ending early.
• Use a sliding scale by notice for anything booking-based, so more warning means a smaller charge.
• Account for mitigation — if you can fill the time with other work, the charge should come down.
• Be transparent — spell the terms out plainly before the work starts, not in the small print.

Where TrustSolo helps

TrustSolo's contract templates are built around exactly this thinking. Their cancellation terms are customisable starting points that let you set a deposit credited against the fee and a kill fee tied to a committed minimum, and — for consumer-facing work — frame cancellation charges around reasonable, unrecovered loss rather than a flat penalty. They're starting points structured on common UK practice, not legal advice, and for anything high-value or unusual a professional opinion is worth having. The essentials sit alongside the other terms every agreement needs — see our guide to the six clauses every freelance contract needs, or how it all works under contracts.

The through-line is simple: a deposit or a cancellation fee that reflects your real position is fair, professional, and far more likely to hold — while a blunt penalty tends to achieve neither. When you'd like terms like these built in from the start, you can start free — no card required.