Gross Payment Status in the Construction Industry Scheme

If you are a subcontractor registered under the Construction Industry Scheme (CIS), obtaining gross payment status can help improve your business cash flow. Contractors can then pay you in full without deducting CIS tax at the standard 20% rate or the higher 30% rate.  If you are a sole trader or partnership, you will instead pay the tax through your Self Assessment tax return. Limited companies will pay the tax through their Corporation Tax return.

Qualifying for gross payment status

To qualify, your business must be carrying out construction operations, have a business bank account, and have submitted returns and paid tax and National Insurance 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 five people or fewer control the limited company, it must have an annual turnover of at least £30,000 for each person.

Applying for gross payment status

You can apply 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 are as follows:

1. Register as a sole trader subcontractor or apply

2. Register a partnership as a subcontractor or apply

3. Register a limited company as a subcontractor or apply

Annual review

Each year, HM Revenue & Customs will conduct an annual review of your business to determine if you can keep the 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 status, then the business will need to wait a year from the date of the cancellation before reapplying.

From April 2026, HM Revenue & Customs can immediately cancel a business’s gross payment status if the business knew, or should have known, that a CIS payment was connected to fraud. The business cannot then reapply for five years.

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