Glossary · UK
What is CIS Gross Payment Status?
A HMRC status allowing CIS subcontractors to receive full payments without the 20% standard deduction, with the obligation to pay their own tax via Self Assessment.
Full Definition
Under the Construction Industry Scheme (CIS), subcontractors can receive payments in three ways: gross (0% deduction), standard (20%), or higher rate (30% for unverified subcontractors). Gross payment status is granted by HMRC to subcontractors who meet three tests: the business test (trading as a business -- sole trader, partnership or limited company), the turnover test (net construction turnover of at least GBP 30,000 per year for sole traders, GBP 100,000 for partnerships, GBP 30,000 per director for companies), and the compliance test (tax returns and payments up to date for the last 3 years). To apply, register via the Government Gateway using the CIS online service. HMRC reviews gross status annually. If a subcontractor fails the compliance test in a review year, HMRC revokes gross status with 90 days notice. Gross status substantially improves cash flow during the year but requires disciplined quarterly Payment on Account management to avoid a large January Self Assessment payment.