CIS Gross Payment Status: How to Get Paid Without Deductions

Most CIS subcontractors have 20% deducted from every payment (see the CIS deduction rates explained). 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. You need to meet all of the qualifying conditions below.

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. The thresholds below apply for the 2026/27 tax year.

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 Good Compliance Record

This is the condition that catches most people. HMRC looks at your tax behaviour over the previous 12 months (the "qualifying period") and checks that you've:

Filed your tax returns on time
Paid your tax and National Insurance on time
No tax obligations still outstanding at the date you apply
Met your VAT obligations on time (if VAT-registered)

HMRC operates a tolerance framework, not zero tolerance. A single minor slip usually won't cost you gross payment status. Within the rolling 12-month qualifying period, HMRC can overlook a limited number of late filings and payments:

Obligation	What HMRC can overlook
Monthly CIS returns (CIS300)	Up to 3 returns, each no more than 28 days late
Self Assessment / Corporation Tax return	1 return, no more than 28 days late
CIS, PAYE or VAT payments of £100+	Up to 3 late payments per tax, each no more than 14 days late
Self Assessment payment of £100+	1 payment, no more than 28 days late
VAT returns	Up to 3 returns, each no more than 28 days late
Any single obligation under £100	Overlooked

Anything beyond these tolerances — a return more than 28 days late, a payment of £100 or more paid more than 14 days late, or a balance still outstanding when you apply — will normally fail the test.

Since 6 April 2024, VAT compliance is part of the GPS test. If you're VAT-registered, late VAT returns or payments now count towards these tolerances. See CIS changes from April 2026 for more on the latest compliance updates.

Don't rely on the tolerances. They exist to stop trivial, one-off errors from costing you your status — not as a licence to pay late. The safest position is to file and pay everything on time, so you don't have to count how many slips you have left.

4. You Have 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) through Self Assessment for CIS workers
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?
Have you met your VAT obligations on time (if VAT-registered)?
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?

A failed review usually comes from breaching the compliance tolerances above, not from a single minor slip. The most common reasons:

Repeated or seriously late payments — More than three late payments of £100+ in the 12 months, or any payment of £100+ paid more than 14 days late
Returns filed beyond tolerance — A Self Assessment return more than 28 days after the 31 January deadline, or more than three late monthly CIS returns
Late VAT returns or payments — If you're VAT-registered (part of the test since April 2024)
Outstanding tax debt — A balance of £100 or more still unpaid at review
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 and your status was withdrawn for standard compliance reasons, you can apply again once you've maintained a clean compliance record for 12 months.

What Changed from April 2026

From 6 April 2026, HMRC has stronger powers to remove gross payment status in fraud cases. Two changes are particularly relevant for GPS holders:

Immediate cancellation without notice — HMRC can cancel GPS straight away (no advance warning) if your business "knew or should have known" that a transaction was connected to the fraudulent evasion of tax. Previously, HMRC had to give notice before revoking GPS.
Five-year reapplication ban — If your GPS is cancelled on fraud grounds, you cannot reapply for five years (up from the previous one-year wait). For standard compliance failures (late filings, unpaid tax), the 12-month wait still applies.

The standard compliance tests (turnover, on-time filing and payment, VAT) continue to apply. The 2026 changes sit on top of these and target fraud risk specifically. For the full picture, see our guide on CIS changes from April 2026.

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

Set up a tax savings account — Move 25-30% of each payment into a separate account immediately
File early — Don't wait until January. Filing in April or May gives you months of breathing room
Pay on time, every time — Set up Direct Debit for payments on account
Track your turnover — Make sure construction work stays above £30,000
Stay on top of VAT — If VAT-registered, late VAT returns now count against your GPS status
Check for HMRC letters — The annual review notification needs a response

Frequently Asked Questions

How long does it take to get gross payment status approved?

HMRC typically processes applications within a few weeks. You'll receive written confirmation by post. Until then, contractors will continue deducting at the standard 20% rate.

Can I lose gross payment status for one late payment?

Not usually. HMRC operates a tolerance framework rather than zero tolerance. Within a rolling 12-month period it can overlook a limited number of minor slips — for example up to three late monthly CIS returns (each within 28 days) or up to three late tax payments of £100 or more (each within 14 days). A single small, quickly-corrected slip rarely costs you your status, but persistent or seriously late filing and payment will. Setting up Direct Debits helps you stay well inside the tolerances.

Is gross payment status worth it for smaller subcontractors?

It depends on your discipline with money. If you're confident about setting aside 25-30% for tax, the improved cash flow is valuable. If you prefer the "forced savings" effect of 20% deductions, the standard rate may suit you better.

Can I reapply after losing gross payment status?

Yes. For standard compliance failures, you can reapply after 12 months of clean compliance. From 6 April 2026, if HMRC cancels your GPS on fraud grounds you cannot reapply for five years. During the wait you'll be back on the standard 20% deduction rate.

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
CIS proposed amendments (VAT compliance for GPS) - GOV.UK