CIS Gross Payment Status — Getting Paid in Full Without Deductions (2026)

What Gross Payment Status Actually Means

Under standard CIS, a contractor verifies your status with HMRC and then deducts either 20% or 30% from the labour element of every invoice. That money is an advance payment toward your eventual tax and National Insurance bill. You only get it back — or get it offset — when you file your Self Assessment return or Corporation Tax return at the end of the year.

With Gross Payment Status, no deduction is made. The contractor pays your invoice in full, and you become responsible for declaring all that income and paying the correct tax and NIC yourself through Self Assessment (sole traders and partnerships) or Corporation Tax (limited companies). You still operate within CIS — you're still registered, contractors still verify you — but your verified status tells them to pay gross.

The Cash-Flow Benefit

The single biggest reason subcontractors want GPS is cash flow. Under standard CIS, 20% of your labour income is sitting with HMRC for months — sometimes most of a year — before it works its way back to you as a refund or a reduction in your final bill. For a subcontractor turning over £80,000 of labour, that's up to £16,000 tied up that you can't use to buy materials, cover wages, fund tools or smooth out a quiet month.

With GPS you keep that money in your own business throughout the year. You set it aside for your eventual tax bill, but in the meantime it's your working capital, not HMRC's. For growing trade businesses this is often the difference between needing an overdraft and funding growth from your own income. The trade-off is discipline: because nothing is deducted at source, you must ring-fence enough to cover your tax bill when it falls due.

The Three Tests You Must Pass

HMRC does not hand out Gross Payment Status to everyone who asks. You have to satisfy three separate tests, and you have to keep satisfying them. Fail any one and your application is refused — or, if you already hold GPS, it can be withdrawn at the annual review.

1. The Business Test

You must show that your business carries out construction work (or supplies labour for it) in the UK, and that it runs through a bank account. In practice this means demonstrating that you are a genuine construction business operating in the UK with a business bank account through which your construction income flows. HMRC wants evidence you are a real trading operation, not just a name on paper.

2. The Turnover Test

This is the test most subcontractors worry about. HMRC looks at your net construction turnover over the 12 months before your application — that means your labour income excluding VAT and excluding the cost of materials. Only the labour element counts.

The standard threshold is at least £30,000 of net construction turnover per relevant person. For a sole trader that's £30,000. For a partnership or company, it's £30,000 multiplied by the number of partners or directors. There is also an alternative £100,000 threshold: a partnership or company can qualify on a single combined figure of £100,000 net construction turnover for the whole business, regardless of the number of partners or directors. Whichever route gets you over the line is the one HMRC applies.

Because the test ignores materials and VAT, a subcontractor who buys a lot of materials needs a higher gross turnover to reach the £30,000 labour figure. Work out your labour-only income before you assume you qualify.

3. The Compliance Test

You must have a clean tax record. HMRC checks that, over the 12 months up to your application, you have filed all your returns and paid all your tax and CIS on time — including Self Assessment or Corporation Tax, PAYE if you employ people, VAT if you're registered, and any CIS deductions you make as a contractor yourself.

HMRC does allow a small number of minor, genuine lapses without failing you — for example a single payment a few days late, or a small late filing — provided your overall record shows you take compliance seriously. But repeated or significant lateness will fail the test. This is the test people most often trip over, because it depends on a full year of disciplined behaviour, not a one-off form.

How to Apply

You apply for gross payment when you register for CIS, or at any point afterwards once you meet the tests. The route depends on how your business is structured:

• Sole traders: register for CIS as a subcontractor and request gross payment status. You'll need your Unique Taxpayer Reference (UTR) and National Insurance number.
• Partnerships: register the partnership for CIS and apply for gross payment for the partnership, supplying the partnership UTR and details for each partner.
• Limited companies: register the company for CIS and apply for gross payment using the company UTR. If the company also pays subcontractors, it has CIS obligations as a contractor too — those count toward its compliance record.

HMRC reviews your figures against the three tests and either grants gross payment or notifies you that standard deduction will continue. If you're refused, the notice will explain why, and you can re-apply once you meet the tests or appeal if you think the decision is wrong.

How Contractors Verify Your Status

Before a contractor pays you for the first time, they must verify you with HMRC. They submit your name and UTR, and HMRC returns one of three answers: pay gross (no deduction), pay under deduction at 20% (you're registered but don't have GPS), or pay under deduction at 30% (you're not registered or couldn't be matched).

If you hold Gross Payment Status, the verification tells the contractor to pay you in full. This happens automatically — you don't hand over a certificate or do anything yourself beyond giving the contractor your correct business name and UTR. Keep those details consistent across every contractor you work with, because a mismatch can cause HMRC to return a higher deduction rate even when you genuinely hold GPS.

The Annual Review — and How You Can Lose It

Gross Payment Status is not granted once and forgotten. HMRC carries out an annual review of every business holding GPS, re-checking your compliance over the previous 12 months. If you have filed late or paid late during that period — your Self Assessment, Corporation Tax, PAYE, VAT or CIS obligations — HMRC can withdraw your gross payment status.

Losing GPS is more than an inconvenience. From the date it's withdrawn, contractors revert to deducting 20% from your payments again, and your cash flow tightens overnight. That's why protecting your status matters as much as obtaining it in the first place.

If HMRC notifies you that it intends to remove your gross payment status, you have the right to appeal. You must usually do so within 30 days of the notice, setting out why the lapses were minor, reasonable or outside your control. While the appeal is considered, your status may be protected — but don't rely on appeals as a routine fix. The far better strategy is to never give HMRC a reason to start the process.

How to Protect Your Gross Payment Status

Keeping GPS comes down to one thing: an unbroken record of filing and paying on time. Build the habits and systems that make lateness almost impossible:

• Pay Self Assessment or Corporation Tax on time — diary the deadlines well in advance and set the money aside through the year so the bill is never a shock.
• Stay current on PAYE if you employ anyone — monthly RTI submissions and payments must be on time, every time.
• File and pay VAT on time if you're registered — Making Tax Digital deadlines count toward your compliance record.
• Submit your own CIS returns on time if you pay subcontractors yourself — your contractor obligations are part of the review.
• Ring-fence your tax money. Because nothing is deducted at source under GPS, put a percentage of every gross payment into a separate account so the tax bill is always covered.
• Set reminders for every deadline. A single missed date can start the withdrawal process — automate alerts so you never rely on memory.

Treat compliance as a permanent operating standard, not a once-a-year scramble. Subcontractors who run clean books, keep money aside and never miss a deadline hold their gross payment status year after year.

Quick Reference: The Three Gross Payment Status Tests

Thresholds and rules can change. Check the current figures on GOV.UK or with your accountant before relying on them.