Gross Payment Status in the Construction Industry Scheme

If you are a subcontractor registered for the Construction Industry Scheme (CIS) in the UK then obtaining gross payment status can be an effective way to improve your business cashflow as contractors will pay you in full, without deducting CIS tax at the standard rate of 20% or the higher rate of 30%.  Tax on the payments will instead be collected via a self-assessment tax return if you are a sole trader or partnership, or via a corporation tax return if the business is a limited company.

Qualifying for gross payment status

To qualify for gross payment status, your business must be carrying out construction operations, have a business bank account, and have submitted returns and paid tax liabilities on time.

Your business turnover for the last 12 months, excluding VAT, must be at least:

• £30,000 if you’re a sole trader
• £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
• £30,000 for each director of a limited company, or at least £100,000 for the whole company.
• If the limited company is controlled by 5 people or fewer, you must have an annual turnover of £30,000 for each of them.

Applying for gross payment status

You can apply for gross payment status by filing in an online or postal form. The type of form will depend on whether you are a sole-trader, partnership or limited company.

The relevant links to apply for gross payment status are as follows:

www.gov.uk/guidance/register-as-a-sole-trader-subcontractor-or-apply-for-gross-payment-status

https://www.gov.uk/guidance/register-a-partnership-as-a-subcontractor-or-apply-for-gross-payment-status

https://www.gov.uk/guidance/register-a-limited-company-as-a-subcontractor-or-apply-for-gross-payment-status

Annual review

Each year, HM Revenue & Customs will conduct an annual review of your business to determine if you can keep the gross payment status.

Your business must submit tax returns and payments on a timely basis in order to retain the gross payment status. Since April 2024, this also includes the submission and payment of VAT returns.

If HM Revenue & Customs cancel your gross payment status, then the business will need to wait a year from the date of the cancellation before reapplying.

For more information on applying for gross payment status please contact your local Perrys branch.