Under the Construction Industry Scheme (CIS), HMRC deducts tax from subcontractor payments before they reach you. Gross Payment Status (GPS) removes that deduction, so you are paid in full and handle your own tax. This guide explains what GPS is, who qualifies, and how to apply.
What is gross payment status?
Gross Payment Status (GPS) means a CIS subcontractor is paid without any deduction. The contractor who pays you does not take 20% for HMRC. You receive your full payment and manage your own tax and National Insurance through self-assessment.
Most CIS subcontractors are paid at the 20% standard deduction rate, or 30% if unregistered. Those deductions are advance payments toward the annual tax bill, not a final settlement. At year end, self-assessment reconciles what is owed against what has been deducted.
With GPS, you keep the full payment throughout the year. That usually helps cash flow. The trade-off is that all tax and NIC is paid through self-assessment, and HMRC expects you to stay compliant if you want to keep GPS.
Who can apply for GPS?
Any CIS-registered subcontractor, whether sole trader, partnership, or company, can apply. HMRC only grants GPS if you pass all three tests: a business test, a turnover test, and a compliance test.
You need to run a UK business that includes construction operations. HMRC checks that you have a genuine construction business, not a shell entity.
Net construction turnover, excluding VAT and materials, must meet these annual minimums:
- Sole trader: £30,000 per year
- Partnership: £30,000 per partner, with each partner assessed individually, or £100,000 for the partnership as a whole, whichever is lower
- Company: £30,000 per director, up to £100,000, with a minimum company turnover of £30,000
HMRC looks at the 12 months before your application. If your business has been trading for less than 12 months, you need to show that you are on track to meet the threshold.
Your tax affairs must be fully up to date. That includes:
- All self-assessment returns filed and correct
- All PAYE, if you employ others, filed and paid on time
- All CIS returns submitted correctly
- No outstanding tax debts, unless under a formal Time to Pay arrangement
- All VAT returns submitted and paid, if VAT registered
One missed filing in the previous three years can fail the compliance test. HMRC checks this carefully.
How do you apply for GPS?
Apply online through your HMRC Government Gateway account. Go to the CIS section and select “Apply for gross payment status.” You will need your Unique Taxpayer Reference (UTR), business details, and turnover evidence.
HMRC usually processes GPS applications within 40 working days. They may contact you for more information while they review it.
If you are a company, HMRC reviews all directors’ tax records as part of the compliance check, not just the company itself.
Once approved, HMRC notifies the contractors who pay you. They update their CIS records so you are paid at 0%. You do not need to contact each contractor yourself.
Use the CIS tax rebate calculator to estimate how much GPS could save you at your current turnover level.
How long does GPS last?
HMRC reviews GPS every year. They can revoke it at any time if your compliance slips. If HMRC plans to revoke it, you will get written notice. You then have 30 days to appeal before the revocation takes effect.
HMRC sends annual letters confirming that GPS is still active. If you do not receive one, check your Government Gateway account.
Keeping GPS means staying on top of every filing deadline. Self-assessment is due by 31 January. CIS returns are due by the 19th of each month. PAYE, if applicable, must be filed and paid on time. VAT, if applicable, must be filed and paid on time. Miss a deadline and you risk revocation.
What happens if GPS is revoked?
If HMRC revokes your GPS, contractors switch you back to the standard 20% deduction rate from the revocation date. You can apply again once your compliance is back in order and the issue that caused the revocation has been resolved.
You can appeal within 30 days. If the revocation was caused by a filing error you have now fixed, HMRC will consider the appeal. If it was caused by an unpaid tax debt, you will need to settle it before appealing.
While GPS is revoked, you are still paid under CIS, just at the standard deduction rate rather than 0%. Your construction business continues.
What if I don’t qualify for GPS?
If your turnover is not yet high enough or you still have compliance issues to sort out, you stay on the standard 20% CIS deduction rate. That is the normal setup for most CIS subcontractors. GPS is something to work toward, not a requirement to start.
Some construction workers who do not qualify for GPS, or who want simpler administration, choose to work through an umbrella company instead. That gives up the GPS cash flow benefit in exchange for PAYE employment rights and simpler tax handling.
See the full comparison in the CIS vs umbrella guide. The right choice depends on your turnover, expenses, and whether you want employment rights.
Ask about managed CIS payroll and how gross payment status changes your payroll structure.
FAQs
What is CIS Gross Payment Status?
GPS means a CIS subcontractor is paid in full without any deduction. Instead of 20% being taken at source, you receive the full payment and handle your own tax through Self Assessment. HMRC grants GPS and reviews it every year.
What are the turnover requirements for GPS?
Sole traders need £30,000 in annual net construction turnover. Partnerships need £30,000 per partner, or £100,000 for the whole partnership, whichever is lower. Companies need £30,000 per director, up to a company total of £100,000.
What compliance requirements does HMRC check for GPS?
HMRC looks at the last three years of compliance. Self Assessment, PAYE, CIS, and VAT returns must be filed on time and be correct, with no outstanding tax debts. Even one missed return can cause the compliance test to fail.
How do you apply for CIS Gross Payment Status?
Apply online through your HMRC Government Gateway account via the CIS section. HMRC usually processes applications within 40 working days. For company applications, it reviews the tax records of all directors.
What happens if HMRC revokes GPS?
Contractors who pay you switch back to the standard 20% deduction rate from the revocation date. You have 30 days to appeal. You can reapply once compliance is back in order and any outstanding issue has been resolved.
