Gross Payment Status
HMRC status that allows a CIS subcontractor to be paid in full with no tax deduction. To qualify, the subcontractor must pass three tests: business (UK construction operations run from a UK bank account), turnover (£30,000 per sole trader/partner/director, or £100,000 aggregate for partnerships and companies), and compliance (filed all returns and paid all tax on time in the previous 12 months). The status is reviewed annually and can be withdrawn for non-compliance.
How it works
To qualify for Gross Payment Status, a subcontractor must pass three separate HMRC tests at the same time: the business test, confirming the business genuinely carries out construction operations in the UK and is run through a UK bank account; the turnover test, a minimum construction turnover generally £30,000 for a sole trader, partner, or director, or £100,000 aggregate turnover for a partnership or company; and the compliance test, a clean recent record of filing returns and paying tax on time.
HMRC reviews Gross Payment Status annually rather than granting it permanently, checking your compliance record against the same tests you originally passed, so a period of late filing or late payment in the intervening year can put your status at risk even if your turnover still comfortably clears the threshold. If status is withdrawn, contractors must resume deducting CIS tax at the normal 20% or 30% rate from future payments.
Holding Gross Payment Status means a subcontractor is paid in full with no CIS deduction at all, leaving them to manage and pay their own tax and National Insurance liability through Self Assessment, including any Payments on Account. This suits established subcontracting businesses that would rather manage their own cash flow than have tax withheld and reclaimed later, but it requires disciplined bookkeeping to avoid an unexpected tax bill.
Example: meeting the turnover test
A sole trader subcontractor has construction turnover of £35,000 in the relevant 12-month period, comfortably above the £30,000 threshold that applies to sole traders, partners, and directors.
A small subcontracting company with only £80,000 of turnover, by contrast, would fail the turnover test, since companies and partnerships need £100,000 of aggregate turnover to qualify for Gross Payment Status.
Frequently asked questions
What happens if I lose Gross Payment Status?
Contractors must go back to deducting CIS tax at the standard 20% (registered) or 30% (unregistered) rate from your future payments, and you manage the rest through Self Assessment.
Can a limited company qualify for Gross Payment Status?
Yes, provided it passes the business and compliance tests and meets the turnover test, which requires an aggregate turnover of £100,000 for partnerships and companies rather than the £30,000 figure that applies to sole traders.
How often is Gross Payment Status reviewed?
HMRC reviews it annually, checking your compliance record against the qualifying tests again, so status can be withdrawn even after it has previously been granted.
Related Terms
CIS
Acronym for Construction Industry Scheme — the HMRC regime under which contractors deduct tax from payments to construction subcontractors at 20% (registered) or 30% (unregistered), with the labour element only, and subbies reconcile via Self Assessment.
Construction Industry Scheme
HMRC scheme requiring contractors to deduct tax (20% for registered subcontractors, 30% for unregistered) from payments to subcontractors for construction work.
Self Assessment
The system by which individuals report their own income, gains, and reliefs to HMRC each year through an online or paper tax return, rather than having tax collected automatically under PAYE.
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Use our free tool to see how gross payment status affects your tax.