Last updated: 14 October 2026
How does a CIS subcontractor get gross payment status?
Apply to HMRC through your online account or by phone, once you meet three tests: a business test, a turnover test and a compliance test. With gross payment status, contractors pay you without deducting CIS tax, which helps your cash flow. You then pay your tax and NIC through Self Assessment or corporation tax. HMRC reviews status every year and can remove it if you fall behind with returns or payments.
The three tests
| Test | Requirement |
| Business test | Carrying out construction work in the UK, through a bank account |
| Turnover test | Net construction turnover (excluding VAT and materials) of £30,000 for a sole trader in the last 12 months |
| Compliance test | All tax returns filed and payments made on time in the last 12 months, with limited exceptions |
Turnover thresholds
- Sole trader: £30,000
- Partnership: £30,000 per partner, or £100,000 for the whole partnership
- Company: £30,000 per director, or £100,000 for the whole company
Compliance
HMRC checks whether you’ve filed and paid on time. You can have a limited number of minor late payments and still pass, but a late Self Assessment return or unpaid tax will usually fail the test. From April 2026, HMRC can remove gross payment status immediately from businesses involved in supply-chain fraud, and VAT compliance is included in the checks.
Example
Kyle, a sole trader groundworker, had £46,000 of net construction turnover last year. He files on time, pays his tax and has no debts. He applies for gross payment status in October 2026 and is approved. Contractors now pay him in full instead of deducting 20%, so on a £4,000 labour invoice he receives £4,000 rather than £3,200.
Annual review
HMRC checks every year whether you still meet the tests. If you fail, you’re moved to 20% deductions, and you can’t reapply for 12 months.
Before applying
- Make sure all returns and payments are up to date
- Keep evidence of construction turnover, such as invoices
- Use a business bank account
- Check your status with your contractors after approval, so they pay you gross
If you are refused
You can appeal within 30 days of HMRC’s decision. Common reasons include late payments, an outstanding Self Assessment return or not meeting the turnover test.
Common mistakes
- Applying while a Self Assessment return is overdue
- Counting materials or VAT in the turnover test
- Paying tax a few days late during the review period
- Assuming gross status moves automatically to a new company when you incorporate
- Forgetting that contractors must verify you again before paying gross
If you hold gross status, set reminders for every filing and payment date. A single serious slip can mean 12 months of 20% deductions.
Frequently asked questions
Do I pay less tax with gross status?
No, only the timing changes.
Can I lose status for late VAT returns?
Yes, VAT compliance can count.
How long does approval take?
Usually up to 90 days, so apply well before you need it.
Does my company need gross status separately?
Yes, each business applies in its own name.
Related: moving gross payment status from a sole trader, delays in gross payment applications and filing monthly CIS returns online.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with CIS gross payment status. See our CIS accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
