Apply for CIS gross payment status

If you are an established subcontractor under the Construction Industry Scheme (CIS), you may be eligible for Gross Payment Status (GPS). This allows you to receive the full value of your construction payments without the standard 20% deduction.

GPS significantly improves your cash flow, but HMRC only grants it to businesses that meet strict eligibility criteria and maintain excellent tax compliance. You must pass three tests: the business test, the turnover test, and the compliance test.

What is gross payment status?

Gross payment status changes how you are paid for construction work:

• Without GPS: Contractors deduct 20% from your payments (or 30% if unregistered) and pay it to HMRC on your behalf
• With GPS: Contractors pay you 100% of the contract value with no deductions. You are responsible for paying all your tax through Self Assessment or Corporation Tax

The deductions you would otherwise receive are advance payments of tax, so GPS does not reduce your tax bill. Instead, it improves your cash flow by letting you keep the money longer.

The financial benefit

Understanding the difference between payment rates shows why GPS matters for established subcontractors.

Example cash flow impact

On a construction contract worth 10,000 pounds (labour element, excluding VAT and materials):

• GPS holder receives: 10,000 pounds (full payment)
• Registered subcontractor: 8,000 pounds (2,000 pounds deducted)
• Unregistered subcontractor: 7,000 pounds (3,000 pounds deducted)

Over a year of contracts totalling 100,000 pounds, the difference between GPS and net payment status is 20,000 pounds in improved cash flow. You still owe the same tax, but you have the money in your bank account for longer.

Who can apply for GPS

GPS is designed for established construction businesses with a proven track record. To qualify, you must pass all three eligibility tests when you apply and continue meeting them to keep your status.

Key points about the tests

The turnover test

The turnover thresholds are based on net construction turnover - this means:

• Only income from construction operations counts (not other business activities)
• Exclude VAT from your calculations
• Exclude the cost of materials you paid for directly
• The qualifying period is the 12 months ending with your application date

If you do not meet the turnover threshold, you cannot get GPS regardless of your compliance record. You may need to grow your business before applying.

The compliance test

This is the most common reason for GPS refusal. HMRC checks your compliance record for the 12 months before your application. From 6 April 2024, VAT compliance is included in this test.

You must have filed all returns and made all payments on time for:

• Self Assessment
• CIS monthly returns (if you are also a contractor)
• VAT
• PAYE and National Insurance
• Companies Act filings (if a limited company)

HMRC allows some minor failures, such as up to 3 late returns that were no more than 28 days late. More serious or repeated failures will result in refusal.

How to apply

Follow this process to apply for gross payment status.

Maintaining your GPS

GPS is not granted permanently. HMRC runs an automated review (the Tax Treatment Qualification Test) for each GPS holder - first around 6 months after GPS is granted, then annually. If you fail, HMRC gives you 90 days' notice before the change takes effect. To keep receiving payments without deductions, you must:

• Continue filing on time: All Self Assessment, CIS, VAT, and PAYE returns must be submitted by their deadlines
• Pay all taxes on time: Late payments can trigger GPS cancellation, even if amounts are small
• Maintain your bank account: Your business must continue operating through a bank account
• Notify HMRC of changes: Tell HMRC if your business structure, address, or other details change
• Manage cash flow carefully: Set aside money for your tax bills since no deductions are being made

What happens if GPS is cancelled

If you fail the compliance test at annual review, HMRC will cancel your gross payment status:

• You will receive written notice explaining the reason for cancellation
• You have 30 days to request a review of the decision
• Once cancelled, you revert to 20% net payment status (or 30% if your CIS registration also lapses)
• Contractors who verify you will immediately see your changed status

Re-applying after cancellation

If your GPS is cancelled or your application is refused:

• Address the issues: Resolve the compliance failures that caused the problem (file late returns, pay tax debts, set up a Time to Pay arrangement)
• Wait out the statutory bar: You cannot reapply within 12 months of a cancellation for compliance failures taking effect. If your GPS was cancelled for fraud or false information on or after 6 April 2026, the bar is 5 years (Finance Act 2004, section 66(7), as amended by the Finance Act 2026)
• Build clean compliance: You will need 12 months of clean compliance before reapplying successfully
• Gather evidence: Keep records showing you now meet all three tests
• Reapply: Once the waiting period has passed, submit a new application - it will be refused if you have not addressed the underlying issues

If you believe HMRC made an error in their decision, you can request a review within 30 days or appeal to the tax tribunal.

Is GPS right for your business?

GPS benefits established subcontractors who:

• Have consistent work and turnover above the thresholds
• Maintain excellent tax compliance records
• Need cash flow for materials, wages, and equipment
• Have good financial management and set aside money for tax

GPS may not be suitable if:

• Your compliance record has recent issues
• You struggle to manage cash flow and set aside money for tax
• Your turnover fluctuates below the thresholds
• You have difficulty filing returns on time

Consider whether you can reliably meet the compliance requirements before applying. Having GPS cancelled can be disruptive to your business relationships with contractors.