Last checked October 2026 · by the PaySorted team
What it means
Normally a CIS contractor deducts 20% from your labour and sends it to HMRC. With gross payment status (GPS), they pay the full amount and you deal with your tax yourself, by 31 January. You get the money months earlier — but you must set aside enough for your tax bill.
The three tests
1. The business test. You must show you do construction work (or supply labour for it) in the UK, and that your business is run through a bank account.
2. The turnover test. Over the last 12 months, ignoring VAT and the cost of materials, your construction turnover must be at least:
| Business | Minimum turnover |
|---|---|
| Sole trader | £30,000 |
| Partnership | £30,000 for each partner, or £100,000 for the whole partnership |
| Company | £30,000 for each director, or £100,000 for the whole company |
| Company controlled by 5 or fewer people | £30,000 for each of them |
3. The compliance test. You must have filed your returns and paid your tax on time over the last 12 months — Self Assessment, PAYE, CIS returns, and since April 2024 your VAT returns and VAT payments too.
What slips are allowed
HMRC allows a few small lapses in the 12 months:
- up to 3 late CIS monthly returns, each no more than 28 days late
- up to 3 late VAT returns, each no more than 28 days late
- up to 3 late payments of £100 or more (per tax), each no more than 14 days late
- any late payment under £100
- a Self Assessment or Corporation Tax return filed no more than 28 days late
Anything worse fails the test unless you have a reasonable excuse.
How to apply
Apply online through your HMRC online services account, or by post using the form for your business type. Applying also registers you for CIS if you aren't already. Have your UTR, bank details and a record of your construction turnover ready.
Keeping it: the annual review
HMRC reviews GPS every year. If it thinks you'll fail, it writes to you and gives you a chance to explain. If it isn't satisfied, it sends a second letter saying your status will be withdrawn in 90 days. You can appeal within 30 days of that letter. If you lose GPS, you normally have to wait a year before reapplying.
The easiest way to keep it is to never miss a deadline — and to get paid on time yourself, so there's always money to pay HMRC.
What changed in April 2026
From 6 April 2026, HMRC can remove gross payment status immediately if a business knew, or should have known, that its payments were connected to tax fraud in the supply chain. In those cases the wait before reapplying is 5 years, and the business can be made to pay the lost tax plus a penalty. Check who you work with and keep good records.
PaySorted handles gross-status invoices too: set your CIS rate to 0% and invoices go out with no deduction, while automatic reminders make sure contractors pay on time.
General information based on HMRC guidance (checked October 2026), not tax advice. Your accountant can check whether you qualify.
Common questions
What turnover do I need for CIS gross payment status?
At least £30,000 of construction turnover over the last 12 months for a sole trader, ignoring VAT and materials. Partnerships and companies have their own thresholds.
Does VAT count towards the gross payment turnover test?
No. HMRC says to ignore VAT and the cost of materials. But since April 2024, late VAT returns and payments do count against you in the compliance test.
Can HMRC take gross payment status away?
Yes. HMRC reviews it every year and can withdraw it if you fail the tests. From April 2026 it can remove it immediately in cases linked to supply-chain fraud.
Do I still pay tax with gross payment status?
Yes. You pay your tax and National Insurance through your Self Assessment (or Corporation Tax) as normal. Nothing is taken in advance.