Under the Construction Industry Scheme (CIS), HMRC deducts tax from subcontractor payments before they reach you. Gross Payment Status (GPS) removes that deduction entirely. You get 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 the 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 they are unregistered. Those deductions are advance payments toward the annual tax bill, not the final settlement. At year end, self-assessment sorts out what you owe against what has already been deducted.
GPS holders skip the deduction entirely. Cash flow is better because they keep the full payment during the year. The trade off is that all tax and NIC still has to be paid through self-assessment, and HMRC keeps a close eye on compliance to keep GPS active.
Who can apply for GPS?
Any CIS registered subcontractor, 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.
Business test: you must run a business in the UK that includes construction operations. HMRC checks that you are running a real construction business, not a shell entity.
Turnover test: net construction turnover, excluding VAT and materials, must meet minimum annual thresholds:
- Sole trader: £30,000 per year
- Partnership: £30,000 per 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 the application. New businesses with less than 12 months of trading need to show they are on track to meet the threshold.
Compliance test: your tax affairs must be fully up to date. That covers:
- All self-assessment returns filed correctly
- All PAYE, if you employ others, filed and paid on time
- All CIS returns submitted correctly
- No outstanding tax debts, unless you are under a formal Time to Pay arrangement
- All VAT returns submitted and paid, if VAT registered
One missed filing in the last three years can fail the compliance test. HMRC checks 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), your 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 record.
Once approved, HMRC tells the contractors who pay you. They update their CIS records to pay you at 0%. That happens automatically. You do not need to notify each contractor yourself.
Use the CIS tax deduction calculator to see how much GPS could save you for your current turnover level.
How long does GPS last?
HMRC reviews GPS every year. It can revoke it at any time if your compliance slips. You will get written notice if GPS is being revoked. You then have 30 days to appeal before the revocation takes effect.
HMRC sends annual letters to confirm 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 must go in by 31 January. CIS returns must go in by the 19th of each month. PAYE, if it applies, must be on time. VAT, if it applies, must be on time. Any missed deadline risks revocation.
What happens if GPS is revoked?
If HMRC revokes your GPS, contractors who pay you switch 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 fixed.
You can appeal within 30 days. If the revocation came from a filing error that you have now fixed, HMRC will look at the appeal. If it came from an unpaid tax debt, you will need to settle it before appealing.
During revocation, you are still paid under CIS, just at the standard deduction rate instead of 0%. Your construction business continues.
What if I do not qualify for GPS?
If your turnover does not yet meet the threshold, or you have compliance issues to resolve, you work under the standard 20% CIS deduction rate. That is the normal position for most CIS subcontractors. GPS is a goal to work toward, not something you need before you start.
Some construction workers who do not qualify for GPS, or who want simpler admin, choose to work through an umbrella company instead. That trades the GPS cash flow benefit 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, your expenses, and whether you want employment rights.
Speak to the CIS payroll service about how GPS affects your payroll structure and what DASA can offer CIS registered subcontractors.
Frequently Asked Questions
What is CIS Gross Payment Status?
GPS means a CIS subcontractor is paid in full with no deduction. Instead of 20% being taken at source, the subcontractor gets the full payment and manages 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 checks the last three years of compliance. All self-assessment, PAYE, CIS, and VAT returns must be filed on time and correct, with no outstanding tax debts. One missed return can fail the compliance test.
How do you apply for CIS Gross Payment Status?
Apply online through your HMRC Government Gateway account in the CIS section. HMRC usually processes applications within 40 working days. For company applications, all directors’ tax records are reviewed.
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 apply again once compliance is restored and the issue is fixed.
