Answers · UK 2025/26

How does CIS gross payment status work?

CIS gross payment status allows self-employed subcontractors and companies to receive full contract payments without any tax deduction at source. Instead of the standard 20% CIS deduction (or 30% for unregistered subcontractors), the subcontractor pays their tax liabilities directly to HMRC through Self Assessment.

Last updated: 27 June 2026Last reviewed: 27 June 2026How we verify

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Under the Construction Industry Scheme (CIS), contractors are normally required to deduct tax at source from payments to subcontractors -- 20% for registered subcontractors or 30% for unregistered ones. Gross payment status (GPS) is an exemption that removes this deduction, allowing subcontractors to receive the full gross payment. **Why does it matter?** For a subcontractor earning £200,000 in CIS payments, the difference between GPS and standard CIS is significant: - Standard CIS (20% deduction): Receives £160,000; £40,000 held by contractor and paid to HMRC - GPS: Receives £200,000 in full; manages own tax payments CIS deductions can create cash-flow advantages for HMRC but disadvantages for the subcontractor, who effectively gives HMRC an interest-free loan throughout the year. **How to qualify for GPS** HMRC applies three tests: 1. **Business test** -- The applicant must carry on a business in the UK that consists of or includes construction operations. 2. **Turnover test** -- Minimum annual turnover from construction operations (excluding materials): - Individuals: £30,000 - Partnerships: £30,000 per partner (or £100,000 for the partnership if lower) - Companies: £30,000 per director (or £100,000 for the company if lower) 3. **Compliance test** -- The applicant must have a satisfactory compliance record with HMRC for the previous 12 months -- filing and paying Self Assessment, Corporation Tax, VAT, PAYE, and CIS returns on time. **How to apply** Apply online through HMRC's CIS service or via your tax agent. HMRC checks compliance before granting GPS and can withdraw it if compliance lapses. **Ongoing obligations** Holding GPS does not remove CIS obligations entirely. If the GPS holder acts as a contractor engaging subcontractors, they must still register as a contractor and deduct CIS from those subcontractors' payments (unless those subcontractors also hold GPS). **Losing GPS** HMRC reviews GPS holders regularly. Failure to file returns or pay tax on time can lead to GPS being revoked, reverting payments to 20% deduction at source.