CIS Gross Payment Status: how to apply, and why most subbies should.
Stop letting HMRC sit on 20 percent of your earnings for nine to eighteen months. Here's the full breakdown of who qualifies, what HMRC actually checks (including the new VAT rule from April 2024), and the fastest way through the application in 2026.
What CIS Gross Payment Status actually is
The Construction Industry Scheme (CIS) is HMRC's withholding tax for the UK construction sector. Whenever a contractor pays a subcontractor for construction work, the contractor must verify the subbie with HMRC and then either deduct 20 percent (the standard verified rate), 30 percent (the unverified rate), or zero. That zero is gross payment status.
Most subcontractors sit on 20 percent. The contractor sends the deduction to HMRC each month, and the subbie sees only 80 percent of the labour element of each invoice. Materials are not deducted, but labour, plant hire and travel are.
GPS reverses that arrangement. The contractor pays you the whole invoice. HMRC trusts you to handle your own tax position through Self Assessment (sole traders and partnerships) or Corporation Tax (limited companies). It does not change how much tax you eventually pay. It changes when.
So the headline question for any working subbie is simple. Would you rather have your tax money sitting in your account through the year, or sitting at HMRC waiting for next April's refund?
Why most subbies should want it (the cash flow argument)
Cash flow is the entire point. A working subcontractor billing £80,000 a year sees roughly £16,000 of CIS deductions parked with HMRC over the course of the tax year. That money is yours. You're going to get it back. But it sits in HMRC's account until you file your return and either claim it back as a refund or have it offset against tax due.
For a sole trader on Self Assessment, that refund usually lands anywhere from May (if you filed straight after 5 April) to the following January. For a limited company the deductions are credited against PAYE liabilities each month, but they still tie up cash you could be using.
A subbie on GPS keeps that £16,000 in their own bank account through the year. They use it to buy materials before invoicing, pay labour through delays, take on bigger jobs, or just stop borrowing on a credit card to bridge the wait. The tax bill at year-end is the same. The cash position through the year is dramatically different.
We see the same reaction every month. A subbie on £80K turnover walks in, we run the GPS application, and within six to eight weeks they're being paid in full. The first month they don't lose £1,300 to deductions, they call us to say it felt like a pay rise. It isn't a pay rise. It's their own money, finally turning up on time.
The three tests you have to pass
HMRC runs three tests when you apply for GPS. You have to pass all three. The first two are usually straightforward. The third one trips up most subcontractors who try without checking their filing history first.
1. Business test
You need to run a construction business in the UK, have a UK business bank account, and the business has to actually carry out construction work as defined in the Income Tax (Construction Industry Scheme) Regulations 2005. Labour-only sole traders qualify. Pure plant hire without operators sometimes does not. The form asks for the business address, your Unique Taxpayer Reference (UTR, the 10-digit number HMRC issues to every taxpayer), and the bank account that gross payments will be paid into.
2. Turnover test
You have to demonstrate your net construction turnover for the last 12 months. Net here means gross construction income minus VAT and minus the cost of materials. Labour, plant hire and travel stay in. The thresholds depend on entity:
| Structure | Standard test | Alternative test |
|---|---|---|
| Sole trader | £30,000 net construction turnover | Not applicable |
| Partnership | £30,000 per partner | £100,000 across the partnership |
| Limited company | £30,000 per director or shareholder (where 5 or fewer people control the company) | £100,000 net company-wide turnover |
The £100,000 alternative test was reduced from £200,000 with effect from 6 April 2016. It's particularly useful for one-director construction limited companies where a single director who does not personally draw £30K of net turnover can still qualify the company through the £100,000 route.
A common snag: subbies who include the cost of materials in their turnover figure inflate the number, assume they qualify, then fail the test on review. Net is gross minus materials minus VAT. Read the form carefully and pull the figure from your accounts, not from your invoices.
3. Compliance test
This is the one that catches most applicants. HMRC looks back 12 months and checks that you have filed and paid every relevant return on time. Since 6 April 2024 the test now covers:
- Self Assessment returns and balancing payments
- Corporation Tax returns and payments
- PAYE returns (Real Time Information) and PAYE payments
- CIS returns (if you're also a contractor paying other subbies)
- VAT returns and payments (added 6 April 2024)
There is a small tolerance for slips. HMRC's published guidance allows up to 4 PAYE late submissions of less than 14 days, and 2 small CIS lates, without failing the test. VAT and Corporation Tax are treated more strictly. Aim for zero lates across the board.
How to apply
The application form depends on your structure. Sole traders fill in form CIS302 (gross payment application), normally alongside CIS301 if you are not yet CIS-registered at all. Partnerships use form CIS304. Limited companies use form CIS305.
Online through your Government Gateway business tax account is the fastest route. The system pre-fills the data HMRC already holds on you, which means fewer errors and fewer evidence requests. Paper forms work but add two to three weeks to the timeline.
If you are brand new to construction with no 12-month trading history, HMRC will ask for projected turnover, copies of contracts in hand, and evidence of the businesses you'll be subcontracting to. New businesses are not blocked from GPS. They just need to provide more documentation up front.
The application timeline
From submission to decision letter, a clean GPS application typically clears in 30 to 60 days. The chart below shows the stages most applications go through.
The "30 to 60 days" range hides a lot of variation. A clean application from a sole trader with three or more years of on-time Self Assessments is usually approved in 21 to 30 days. A limited company with a recent compliance flag can sit in HMRC review for 60 to 90 days while extra evidence is requested. We've seen one outlier case stretch to four months because the director moved house mid-application and HMRC's letters bounced.
Keeping it once you have it (the annual review trap)
GPS is not a one-off approval. HMRC runs the Tax Treatment Qualification Test (TTQT) automatically every 12 months. The TTQT rechecks the same compliance criteria from the original application, looking back over the most recent 12 months of filings and payments.
If you've slipped during the look-back year, HMRC sends a notice of intention to remove gross payment status with a 90-day window for you to either appeal or correct. The notice is automated. There's no warning before the cut-off date.
Most removals we see in our practice trace back to one of three things. A late VAT return or VAT payment, particularly common in companies that switched VAT software mid-year and missed a Direct Debit re-authorisation. A late Corporation Tax return where the accountant filed on time but the company didn't pay on time. Or a late CIS300 monthly return where the company was acting as both a contractor and a subcontractor and forgot the contractor side of its obligations.
If you spot a late filing during the year, fix it immediately and document the reason. HMRC accepts genuine reasonable excuse appeals far more readily when they're raised at the time, not after the removal notice has already landed.
What this means for you
You have a clean filing record and £30K+ of net construction turnover? Apply this week. Government Gateway, the right CIS form, the application takes around 15 minutes. The cash flow benefit lands within six to eight weeks of approval and never goes away.
Your filings have any history of late submissions or payments? Get them clean for 12 months first. A planned GPS application from a clean position passes far more often than an ambitious one from a wobbly compliance record.
Removed from GPS in the past? You can reapply 12 months after the removal date, providing the next 12 months of compliance is clean. We've put four subbies back on gross payment in 2025/26 after they were removed for late VAT in early 2024. The pattern is the same each time: one quarter went wrong, three quarters cleaned it up, the reapplication went through on the first pass.
Not sure where you sit? Speak to your account manager on a free 15-minute call. We'll review your last 12 months of filings, tell you whether your application would pass today, and run it through Government Gateway with you if it would.
FAQ
CIS Gross Payment Status (GPS) is a HMRC approval that lets contractors pay you the full invoice without deducting 20 percent under the Construction Industry Scheme. You handle your own tax through Self Assessment or Corporation Tax once a year instead of having tax withheld at source on every payment.
You need £30,000 of net construction turnover (excluding VAT and the cost of materials) in the last 12 months as a sole trader. Partnerships need £30,000 per partner or £100,000 across the partnership under the alternative test. Limited companies need £30,000 per director or shareholder where 5 or fewer people control the company, or £100,000 net company-wide turnover.
No. If you are not registered for VAT the VAT compliance test does not apply to you. The VAT rule only catches subcontractors who are above the £90,000 VAT registration threshold or who registered voluntarily. The change took effect from 6 April 2024.
Between 30 and 60 days for a clean application is typical in 2026. Sole traders with three or more years of on-time Self Assessments often get a decision within 21 to 30 days. Limited companies with any compliance flag can sit in HMRC review for 60 to 90 days while extra evidence is requested.
Yes, in theory. HMRC's annual Tax Treatment Qualification Test (TTQT) reruns the compliance check every 12 months. Published HMRC guidance allows a small tolerance: up to 4 PAYE late submissions of less than 14 days and 2 small CIS lates. VAT and Corporation Tax are treated more strictly. One late VAT return is enough to trigger a removal notice.
Yes. You can reapply 12 months after the removal date, provided the next 12 months of filings and payments are clean. Document any genuine reasonable excuse for the original failure when you reapply.
They are opposite ends of the CIS scale. Gross payment status is 0 percent withholding because HMRC trusts you to settle your own tax. Unverified is 30 percent withholding because the contractor could not match your details to a CIS record at HMRC. The standard verified rate sits in the middle at 20 percent.
Ready to apply for Gross Payment Status?
Book a free 15-minute call. We'll review your last 12 months of filings, tell you whether your application would pass today, and run it through Government Gateway with you if it would. Quotes issued in writing within 24 hours, including any current period discounts and seasonal offers applied at engagement.
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