CIS Gross Payment Status: Eligibility, Application & 2026 Rules
CIS Gross Payment Status can allow an eligible subcontractor to receive construction payments without the usual 20% CIS deduction. That can make a significant difference to working capital, but obtaining GPS is only the start. Your tax compliance, turnover, CIS records and, from April 2026, the businesses you deal with in a construction supply chain can all matter.
What does CIS Gross Payment Status actually mean?
Gross Payment Status, often shortened to GPS, allows a subcontractor registered under the Construction Industry Scheme to receive qualifying construction payments without CIS being deducted first.
Normally, a registered subcontractor is paid after a contractor deducts CIS at 20%. An unregistered or unmatched subcontractor can face the higher 30% rate. Where HMRC confirms that a subcontractor has Gross Payment Status, the CIS deduction rate is effectively 0%.
That does not remove the underlying tax liability. Instead, the business keeps more of its cash during the year and deals with its tax through the appropriate Self Assessment, Corporation Tax, payroll and other tax processes.
If you currently have CIS taken from your invoices, our guide to CIS deductions explains how the deduction base, materials and payment statements work.
Gross payment
HMRC confirms Gross Payment Status and the contractor pays the qualifying CIS payment without a CIS deduction.
Standard deduction
This is generally used where the subcontractor is registered for CIS and HMRC successfully verifies them for payment under deduction.
Higher deduction
The higher rate can apply where the subcontractor is not registered or HMRC cannot successfully match and verify the details supplied.
The three main tests for Gross Payment Status
Applying for Gross Payment Status is not simply a request to change your deduction rate. HMRC considers whether the business passes the business, turnover and compliance tests.
Business test
Your business needs to be carrying out construction work, or supplying labour for construction operations, in the UK and operated through a bank account.
- Construction activity in the UK
- Genuine business operation
- Business run through a bank account
Turnover test
HMRC normally looks at net construction turnover during the 12 months before the application. VAT and the direct cost of relevant materials are excluded when determining net construction turnover.
- £30,000 for an individual sole trader
- Participant-based test for companies and partnerships
- Alternative £100,000 test can apply to companies or partnerships
Compliance test
HMRC considers whether relevant tax obligations have been handled properly. Depending on the business, this can include Self Assessment, Corporation Tax, PAYE, National Insurance, VAT and CIS responsibilities.
- Returns submitted when required
- Tax liabilities dealt with on time
- CIS and PAYE obligations kept up to date
- VAT compliance where applicable
| Business type | General turnover position | What HMRC looks at |
|---|---|---|
| Sole trader | Net construction turnover of at least £30,000 in the relevant 12-month period. | Turnover excluding VAT and relevant material costs, alongside the business and compliance tests. |
| Partnership | The standard test broadly uses £30,000 for each relevant participant. An alternative £100,000 turnover test may apply. | Partnership structure, qualifying turnover and the compliance position of relevant partners. |
| Limited company | The standard test broadly uses £30,000 for each relevant person. An alternative £100,000 turnover test may apply. | Directors and, for close companies, relevant beneficial owners can affect the standard test calculation. |
The detailed turnover rules contain additional tests for particular situations, so businesses with restructures, inherited businesses, group companies or unusual ownership should check their position rather than relying only on the simplified thresholds above.
How to apply for CIS Gross Payment Status
You can apply for Gross Payment Status through HMRC. If you are not already registered as a CIS subcontractor, the GPS application can also form part of the registration process.
The application route depends on whether you operate as a sole trader, partnership or limited company. Before submitting it, the figures should reconcile with your accounting records because HMRC can ask for evidence to support the turnover entered on the application.
Confirm whether the applicant is the sole trader, partnership or limited company that actually carries out the construction work.
Review the previous 12 months and calculate qualifying net construction turnover using the correct material and VAT treatment.
Review CIS, VAT, PAYE, Self Assessment or Corporation Tax obligations before HMRC carries out its compliance test.
Apply using the appropriate HMRC service and keep invoices, accounts, bank records and other evidence supporting the application.
HMRC can carry out post-acceptance evidence checks and ongoing reviews. Your accounting records therefore need to support the turnover and compliance position after GPS has been granted as well as on the day you apply.
Your contractor still needs the correct CIS verification
Gross Payment Status does not mean you simply tell a contractor not to make deductions. Contractors use HMRC's CIS verification process to establish whether a subcontractor should be paid gross, at the standard deduction rate or at the higher deduction rate.
For a new subcontractor, the contractor normally verifies the business using the details held by HMRC. Those details need to match the information used when the subcontractor registered.
A contractor may not need to verify the subcontractor again if they have already included them on a CIS return in the current or previous two tax years, unless HMRC has notified them that the payment status has changed.
Why Gross Payment Status can matter so much to a subcontractor
The attraction of GPS is usually cash flow rather than a lower tax bill. A growing construction business can have weekly wages, plant hire, insurance, fuel, materials and suppliers to pay before its final tax position is known.
Keeping the cash in the business until the relevant tax becomes payable can reduce the funding pressure created by deductions throughout the year.
That makes good bookkeeping even more important. Receiving money gross should not be confused with the entire receipt being available to spend. Tax provisions still need to be planned.
£10,000 labour-only CIS payment
Simplified illustration only. Actual CIS deductions are calculated after considering items such as VAT and qualifying material costs where applicable.
Getting Gross Payment Status is one job. Keeping it is another.
HMRC carries out ongoing compliance checks on Gross Payment Status holders. A business therefore needs systems that keep its tax position under control throughout the year rather than repairing everything when a review arrives.
Keep CIS records clean
Where you are also a CIS contractor, subcontractor verification, deduction calculations and monthly CIS returns need to agree with the underlying payments and bookkeeping.
Keep tax filings current
VAT, PAYE, National Insurance, Self Assessment, Corporation Tax and other relevant obligations can feed into your compliance position.
Keep evidence behind the numbers
Bank records, sales invoices, material invoices and properly maintained construction bookkeeping make it easier to support the figures supplied to HMRC.
CIS Gross Payment Status now carries greater supply-chain risk
Changes effective from 6 April 2026 strengthen HMRC's powers where CIS transactions are connected to deliberate non-compliance. This is particularly important for businesses operating in labour-heavy construction supply chains.
The test can extend beyond your own tax return.
Where a business makes a construction payment, or makes a return containing a CIS credit, and it knew or should have known the transaction was connected to deliberate non-compliance, HMRC now has stronger powers to act.
HMRC can immediately remove Gross Payment Status in circumstances covered by the new fraud provisions.
HMRC can make a determination relating to the tax lost through the relevant CIS payment or credit.
A penalty of up to 30% of the relevant tax loss can apply and can, in appropriate cases, extend to company officers.
When can the five-year Gross Payment Status restriction apply?
From April 2026, where Gross Payment Status is immediately removed because of fraud or serious non-compliance, the restriction on making a fresh GPS application can be five years.
This should not be read as a five-year ban following every possible loss of Gross Payment Status. The extended reapplication consequence relates to immediate removal under the relevant serious non-compliance provisions.
HMRC's existing grounds for immediate cancellation also cover serious behaviour such as supplying false information to obtain GPS, fraudulently providing incorrect tax information or knowingly failing to comply with a CIS obligation.
Due diligence is no longer something to treat as paperwork after the event
The 2026 rules make it particularly important to understand who you are dealing with and whether the commercial arrangement makes sense.
There is no single due-diligence checklist that automatically removes all tax risk. HMRC's guidance instead points businesses towards understanding their labour supply chains, checking suppliers and keeping evidence of the checks carried out.
Warning signs can include unexplained parties in a supply chain, inconsistent paperwork, unusual third-party payments, repeated supplier failures, questionable CIS credits or commercial arrangements that do not have an obvious legitimate explanation.
Confirm who is actually contracting, supplying labour, invoicing and receiving payment.
Use the HMRC verification result rather than relying on a supplier's statement that they hold GPS.
Understand what service is being supplied, by whom and why each entity is present in the chain.
Do not ignore mismatched invoices, payment routes or explanations that do not fit the actual work.
Record the checks performed, documents reviewed and decisions made rather than relying on informal conversations.
Sole trader vs limited company: GPS affects the same payment, but not the same tax process
Gross payments feed into Self Assessment
A sole trader normally reports construction income through Self Assessment and deals with the resulting Income Tax and National Insurance position personally.
The basic turnover threshold is £30,000 of qualifying net construction turnover in the relevant 12-month period, alongside the business and compliance tests.
If CIS has already been deducted, those deductions normally need to be recorded and claimed correctly rather than treated as a business expense.
Company compliance has more moving parts
A limited company's construction receipts belong to the company. Its Corporation Tax position, payroll, VAT and CIS responsibilities can all sit alongside the Gross Payment Status compliance requirements.
The turnover calculation also depends on the number of relevant people connected with the company unless the alternative turnover test applies.
Companies that both receive construction payments and pay subcontractors need especially clear separation between CIS deductions suffered and deductions the company itself must report and pay to HMRC.
Before applying for GPS, check the records HMRC will actually see
An application can look straightforward until the turnover figure, bookkeeping, CIS returns, VAT records and bank receipts are placed next to each other.
Path Accountants can review the accounting and CIS side of the position before an application or where an existing GPS holder is concerned about compliance.
We support construction businesses including subcontractors , builders and businesses operating as both contractor and subcontractor.
Continue with the part of CIS that affects your business
Gross Payment Status is only one part of the Construction Industry Scheme. These related Path Accountants pages cover the records, deductions, returns and accounting work around it.
CIS Gross Payment Status FAQs
What is CIS Gross Payment Status?
CIS Gross Payment Status allows an eligible subcontractor to receive qualifying construction payments without the contractor deducting CIS first. The subcontractor remains responsible for reporting the income and paying its eventual tax liabilities.
How do I get Gross Payment Status under CIS?
You apply to HMRC and need to satisfy the relevant business, turnover and compliance tests. HMRC can also ask for evidence supporting the figures included in the application.
What is the CIS Gross Payment Status turnover test?
For a sole trader, the standard threshold is £30,000 of qualifying net construction turnover in the 12 months before the application. Companies and partnerships have participant-based rules, with an alternative £100,000 turnover test potentially available.
Does Gross Payment Status mean I pay no tax?
No. GPS means CIS is not withheld from qualifying payments by the contractor. The income must still be recorded and reported and the business remains responsible for the tax it owes.
Can HMRC take away Gross Payment Status?
Yes. Gross Payment Status depends on continuing to meet the relevant requirements. HMRC can change or cancel the status where the statutory conditions are no longer satisfied, and it has immediate cancellation powers in certain cases involving fraud or serious non-compliance.
What changed for CIS Gross Payment Status in April 2026?
From 6 April 2026, HMRC has strengthened powers where a business makes a construction payment or claims a CIS credit that it knew or should have known was connected with deliberate non-compliance. HMRC can in relevant cases immediately remove GPS, assess the related tax loss and charge penalties.
Can losing Gross Payment Status stop me reapplying for five years?
It can in cases where GPS is immediately removed for fraud or serious non-compliance under the relevant rules. The five-year consequence should not be interpreted as applying automatically to every situation in which a subcontractor loses Gross Payment Status.
Do contractors still verify a subcontractor who has Gross Payment Status?
Contractors normally use HMRC's CIS verification process when a new subcontractor is engaged. HMRC then confirms whether the subcontractor should be paid gross or whether the standard or higher deduction rate applies.
Can Path Accountants help with a Gross Payment Status application?
Path Accountants can review the accounting and CIS records behind the application, including turnover, bookkeeping, CIS returns and related compliance issues, and explain what needs attention before the application is made.
Worried about obtaining or keeping Gross Payment Status?
Get a CIS accounts review. We can look at the records behind your GPS position, identify accounting or CIS issues that need attention and explain the practical next steps.
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