What CIS Gross Payment Status Actually Means

Under the standard Construction Industry Scheme, a contractor deducts 20% (or 30% if you are unregistered) from your labour invoice and pays it directly to HMRC as an advance on your tax bill. You get paid the net amount.

With gross payment status (GPS) the contractor pays you the full invoice value — no deduction at all. You handle the tax yourself through Self Assessment (sole traders) or Corporation Tax (limited companies).

For cashflow, the difference is significant. On £100,000 of labour invoices over a year, 20% CIS held back by contractors is £20,000 sitting with HMRC until your tax return reconciles. GPS keeps that money in your business in the meantime.

The Three Qualifying Tests

HMRC requires you to pass all three of the following before granting gross payment status. Failing any one means standard 20% deductions continue.

Business test — your business is run through a UK bank account and your operations are based in the UK.
Turnover test — net construction turnover of at least £30,000 in the previous 12 months for a sole trader, or £30,000 per relevant person for partnerships and companies.
Compliance test — all tax returns and payments due in the previous 12 months were submitted and paid on time. HMRC is strict on this.

How to Apply

There are different application paths depending on your business structure. None require an accountant but most subcontractors who care about getting it right work with one.

Sole traders: apply via your Self Assessment account under the CIS section of the Government Gateway.
Limited companies: apply through the company's Corporation Tax account, including UTRs for every relevant person.
Partnerships: the principal partner applies on behalf of the partnership, providing details for every partner who works in the construction business.
HMRC typically responds within 8 weeks. Approval is backdated to the application date.

Keeping Gross Payment Status Once You Have It

HMRC runs an automatic annual compliance check on every GPS holder. You can lose your status for things that seem small at the time:

A late VAT return — even by a day, if it is a third or fourth offence in 12 months.
Late PAYE submissions (for limited companies with employees).
A late Self Assessment payment — including a payment on account.
Failure to submit a CIS300 return on time if you also act as a contractor.

Is GPS Worth Applying For?

For most subcontractors with consistent £30k+ labour turnover, yes — the cashflow improvement is real and the application is free. The bigger question is whether your business can stay on top of the compliance discipline HMRC requires to keep it.

If you have ever filed a VAT return late or missed a payment on account, get your compliance process tight before applying. Losing GPS after winning it is a worse position than never having had it — contractors who paid you gross may need to be re-verified, and your cashflow drops by 20% overnight.

The simplest path: pick one app that handles your invoicing, VAT, and CIS records in one place. Manual spreadsheets are where compliance slips first.

How Traddie Helps

Whether you have GPS or are on standard 20% deductions, Traddie handles the workflow the same way — you tag each customer with their CIS rate (0%, 20%, or 30%), and every invoice automatically applies the correct deduction and produces a compliant payment & deduction statement.

For GPS holders, Traddie's VAT threshold monitor and automatic submission reminders are the easiest way to keep your compliance record clean enough that HMRC's annual check is a non-event.