CIS Gross Payment Status: Eligibility, Application, and Maintenance

Gross payment status under the Construction Industry Scheme means subcontractors receive payment in full, with no CIS deductions taken. This significantly improves cashflow because you are not waiting for HMRC to credit deductions against your tax bill. However, gross payment status must be applied for, and it comes with ongoing compliance requirements. This guide explains who qualifies, how to apply, and what you need to do to keep it.

What Is Gross Payment Status?

Gross payment status is a CIS registration category that allows a subcontractor to be paid in full without the contractor deducting CIS tax at 20% or 30%. Instead of deductions being taken at source and credited to your tax account, you receive the full payment amount and account for your own tax through Self Assessment or Corporation Tax returns.

• No CIS deductions are taken from your payments -- you receive the gross amount
• You are still registered under CIS and must be verified by contractors
• Verification returns 0% deduction rate to the contractor
• You remain responsible for paying your own tax through Self Assessment or Corporation Tax
• Significantly improves cashflow compared to having 20% or 30% deducted

Eligibility Requirements

To qualify for gross payment status, you must pass three tests set by HMRC: the business test, the turnover test, and the compliance test. All three must be satisfied at the time of application.

• Business test: you must carry on a business in the UK that includes construction work
• The business must be run through a bank account
• Turnover test: your net construction turnover must be at least £30,000 per year (for individuals)
• For companies, the threshold is £30,000 multiplied by the number of directors (minimum £30,000)
• For partnerships, it is £30,000 per partner (minimum £30,000)
• Compliance test: you must have a satisfactory tax compliance record

The Compliance Test in Detail

The compliance test is the most common reason for applications being refused or gross payment status being withdrawn. HMRC checks that you have met your tax obligations consistently.

• All tax returns must have been submitted on time for the qualifying period
• All tax payments must have been made on time (Self Assessment, VAT, PAYE, CIS)
• No outstanding tax debts (unless you have a formal time-to-pay arrangement)
• The qualifying period is typically the 12 months before application
• A single late return or late payment can be enough for HMRC to refuse or withdraw gross status
• HMRC reviews compliance annually and can withdraw gross status at any time

How to Apply

You apply for gross payment status when you register for CIS, or you can apply to upgrade your existing CIS registration. Applications are made through HMRC online or by contacting the CIS helpline.

• New registrations: apply for gross payment status as part of your CIS registration
• Existing registrations: apply to upgrade from net (20%) to gross (0%)
• Online: through your HMRC online account
• By phone: call the CIS helpline and request an upgrade
• HMRC will assess your application against the three tests
• If approved, your status changes and contractors will be notified through verification
• If refused, HMRC will explain which test you failed

Maintaining Gross Payment Status

Once granted, gross payment status is not permanent. HMRC reviews your compliance regularly and can withdraw it if you fail to meet the ongoing requirements. Losing gross status means contractors must start deducting 20% from your payments.

• HMRC conducts annual reviews of gross payment status holders
• All tax returns must continue to be filed on time
• All tax payments must continue to be made on time
• You must continue to meet the turnover test
• If HMRC withdraws your gross status, you have the right to appeal
• The appeal process has strict time limits -- act quickly if you receive a withdrawal notice
• Re-application is possible after resolving the compliance issues, but is not guaranteed

Benefits of Gross Payment Status

The primary benefit is cashflow. Instead of having 20% deducted from every payment and waiting for it to be credited, you receive the full amount immediately. For subcontractors with significant construction turnover, this can make a substantial difference to working capital.

• Full payment received -- no deductions taken at source
• Improved cashflow and working capital
• No need to wait for CIS deductions to be credited against your tax bill
• Simpler payment reconciliation with contractors
• Can be a competitive advantage when tendering (shows HMRC compliance record)
• Demonstrates a strong compliance track record to clients