Registered Subcontractor – CIS Gross Payment Status

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    Q. I am a basic rate taxpayer and a registered subcontractor having tax deducted at 20% from any income. I understand that I can register for CIS gross status to receive my pay with no deductions. How do I go about this and are there any disadvantages?

     

    A: CIS gross payment status means that the contractor does not make tax deductions from payments made to a subcontractor. It is possible to arrange for payments to be made gross rather than having tax deducted but there are conditions. Importantly, your tax and NIC tax returns and payments must be up to date and a business bank account must be used. Turnover must be at least £30,000 if you are sole trader or £30,000 for each partner if operating as a partnership (or £100,000 for the whole partnership). The limits are different for companies depending on how many directors the company has. Application for gross status can be made online and at least one month should be allowed for the application to be approved.

    The ‘downside’ is that you will have to ensure that you put aside enough money to pay any tax and NIC when due rather than claiming any tax refund that may usually arise.

     

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