CIS Gross Payment Status: How to Get Paid Without Deductions

Most CIS subcontractors have 20% deducted from every payment. But there's a way to receive the full amount: gross payment status. If you qualify, contractors pay you in full with no CIS deductions taken at source.

This guide explains who qualifies, how to apply, and what you need to do to keep your status.

What Is Gross Payment Status?

Gross payment status means contractors pay you 100% of your invoice — no CIS deductions. Instead of having 20% withheld throughout the year, you keep the full amount and settle your tax and National Insurance at the end of the year through Self Assessment or Corporation Tax.

The three CIS rates compared:

Status	Deduction rate	Cash flow impact
Unregistered	30%	Worst — nearly a third withheld
Registered	20%	Standard — one fifth withheld
Gross payment	0%	Best — full payment received

Example on a £5,000 invoice:

• Standard (20%): You receive £4,000, contractor sends £1,000 to HMRC
• Gross (0%): You receive £5,000, you pay your own tax later

Who Can Apply?

Gross payment status is available to sole traders, partnerships, and limited companies. But you need to meet all three qualifying conditions.

1. Your Business Does Construction Work in the UK

You need to carry out construction work (or provide labour for it) within the UK. This includes building, repairs, alterations, demolition, installations, and site preparation.

2. You Meet the Turnover Threshold

HMRC looks at your construction turnover from the previous 12 months, excluding VAT and the cost of materials.

Business type	Minimum turnover
Sole trader	£30,000
Partnership	£30,000 per partner, or £100,000 total
Limited company	£30,000 per director, or £100,000 total
Company with 5 or fewer controllers	£30,000 per controller

Important: Only construction-related turnover counts. If you earn £50,000 but only £25,000 is from construction, you won't meet the threshold.

3. You Have a Clean Compliance Record

This is the condition that catches most people. HMRC checks that you've:

• Filed all tax returns on time
• Paid all tax and National Insurance on time for the past 12 months
• No outstanding tax debts

Even one late payment or missed filing can disqualify you. HMRC takes this seriously because gross payment status means they're trusting you to pay later.

You Need a Business Bank Account

HMRC requires that your business operates through a bank account. This doesn't need to be a separate "business account" — but payments need to go through a verifiable account, not cash.

How to Apply

You can apply for gross payment status when you first register for CIS, or later if you're already registered.

Application methods:

• Online — Through GOV.UK using your Government Gateway account
• By post — Using the relevant registration form for your business type

What you'll need:

• Your Unique Taxpayer Reference (UTR)
• National Insurance number
• Business bank account details
• Your construction turnover figures for the past 12 months

Processing time: HMRC typically processes applications within a few weeks. You'll receive written confirmation of your status.

How Gross Payment Status Affects Your Tax

Getting gross payment status doesn't change how much tax you owe — it changes when you pay it.

With standard 20% CIS:

• Tax is taken throughout the year (advance payments)
• At year end, you may get a refund or owe a small balance

With gross payment status:

• You keep all income during the year
• You pay your full tax bill by 31 January (sole traders) or Corporation Tax deadline (companies)
• You may also need to make payments on account (advance payments based on last year's bill)

The cash flow advantage is real, but it comes with responsibility. You need to set aside money for your tax bill throughout the year. If you spend everything and can't pay in January, you'll face interest and penalties — and may lose your gross payment status.

The Annual Review

HMRC reviews every gross payment status holder once a year. This isn't optional — it happens automatically.

What HMRC checks:

• Have you filed all returns on time?
• Have you paid all tax and National Insurance on time?
• Does your turnover still meet the threshold?
• Is your business still doing construction work?

If you pass: Nothing changes. You keep your status for another year.

If you fail: HMRC can withdraw your gross payment status. You'll be moved back to the 20% registered rate.

What Triggers a Failed Review?

The most common reasons:

• Late tax payment — Even by one day
• Late Self Assessment filing — Missing the 31 January deadline
• Outstanding tax debt — Any unpaid balance
• Turnover below threshold — If construction work drops below £30,000

Can You Appeal?

Yes. If HMRC withdraws your status, you can appeal within 30 days. You'll need to explain the circumstances and show that you've resolved the issue.

If your appeal is unsuccessful, you can apply again once you've maintained a clean compliance record for 12 months.

Is Gross Payment Status Worth It?

It works well if you:

• Have steady, predictable construction income
• Are disciplined about setting aside money for tax
• Already file and pay everything on time
• Want to improve cash flow on larger contracts

It may not suit you if:

• You find it hard to save for a lump-sum tax payment
• Your income is irregular or seasonal
• You've had compliance issues in the past
• You prefer the "forced savings" effect of 20% deductions

For many subcontractors, the 20% rate works like automatic savings — the money goes to HMRC, and you get back any overpayment. With gross payment status, that safety net disappears.

Keeping Your Status: Practical Tips

1. Set up a tax savings account — Move 25-30% of each payment into a separate account immediately
2. File early — Don't wait until January. Filing in April or May gives you months of breathing room
3. Pay on time, every time — Set up Direct Debit for payments on account
4. Track your turnover — Make sure construction work stays above £30,000
5. Check for HMRC letters — The annual review notification needs a response

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This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.

Official Sources

• Gross payment status - GOV.UK
• Construction Industry Scheme (CIS) - GOV.UK
• CIS for subcontractors - GOV.UK