Every time a contractor pays you under CIS, they hold back 20% of your labour total and send it to HMRC. It's your money — but you have to wait until after the tax year, file your Self Assessment, and then wait again for the refund.

Gross Payment Status (GPS) removes that deduction entirely. Your contractor pays you 100% of every invoice. You then settle your own tax bill through Self Assessment — but on your own schedule, not HMRC's.

The catch? You have to qualify for it, and HMRC can take it away if your compliance slips. This guide covers exactly who qualifies, how to apply, and what to do if you lose it.

What Is Gross Payment Status?

Under the Construction Industry Scheme, contractors are legally required to deduct CIS tax from subcontractor payments before passing it to HMRC. The default rate is 20% for registered subcontractors (30% if you're not registered at all).

GPS is an exemption from that rule. HMRC grants it to subcontractors who have a track record of paying their own taxes correctly and on time. With GPS, your contractor verifies your status through HMRC's systems, sees you're approved, and pays you in full — no deduction.

GPS vs Standard CIS: The Cash Flow Difference

Here's what the same £5,000 labour invoice looks like under each scenario:

Who Qualifies for Gross Payment Status?

HMRC's criteria are specific. You need to pass three tests simultaneously: a business test, a turnover test, and a compliance test. Miss any one of them and the application fails.

The Business Test

You must be carrying out construction work (or are a contractor paying others to do it) in the UK, and you must have a UK bank account that's used for business payments. This is standard for most working subcontractors.

The Turnover Test

This is where many applications fall short. HMRC requires:

The £30,000 figure is net of materials — it refers to your labour income only, not your total invoice value. If you regularly split labour and materials correctly on your invoices, calculating this should be straightforward. QuoteDone's free invoice generator automatically separates labour and materials on every invoice, so your net labour figure is always clear when HMRC asks.

The Compliance Test

This is the test that catches the most applicants. HMRC looks back at your last 12 months and checks that you have:

• Filed all Self Assessment tax returns on time
• Paid all income tax and NIC bills by the due date
• Filed all VAT returns on time (if VAT-registered)
• Paid all VAT bills by the due date
• Filed PAYE and CIS returns if you're also a contractor
• No serious penalties or prosecution history with HMRC

How to Apply for Gross Payment Status

The application is straightforward if your records are in order. Here's the process step by step:

• 1
  Confirm you're registered for CIS

  You cannot apply for GPS without first being registered as a CIS subcontractor. If you're not yet registered, HMRC will be deducting 30% — even more reason to act. Registration takes around 10 working days.
• 2
  Check your compliance record

  Log in to your HMRC online account and verify that all returns are filed and all payments are settled. One missed deadline in the past 12 months is enough to fail the compliance test. If you have gaps, resolve them before applying.
• 3
  Apply online or by phone

  You can apply through your HMRC online account under the CIS section, or call the CIS helpline on 0300 200 3210 (Monday–Friday, 8am–6pm). HMRC will review your application and respond — usually within a few weeks.
• 4
  Notify your contractors

  Once approved, HMRC updates the CIS verification system. Your contractors will see your GPS status when they verify you, and they must stop making deductions from that point. You don't need to do anything beyond informing them to re-verify you.
• 5
  Set aside money for your January tax bill

  This is the discipline GPS requires. Without the contractor deducting from every payment, you are responsible for saving enough to cover your Self Assessment bill by 31 January. Many subcontractors set aside 20–25% of each payment into a separate account.

Can HMRC Remove Gross Payment Status?

Yes — and they do. HMRC reviews GPS annually, and they can cancel it immediately if your compliance slips. The most common reasons GPS is removed:

If HMRC removes your GPS, they must issue you a written notice. You then have 30 days to appeal if you believe the cancellation was an error. Appeals go through the standard HMRC tribunal process.

GPS, Materials, and VAT: What Changes?

A common point of confusion: GPS only applies to the CIS deduction on labour. It has no effect on how materials are treated on your invoices, and it doesn't change whether your contractor applies the VAT Domestic Reverse Charge.

What GPS Changes

• Contractor no longer withholds 20% of your labour payments
• You receive 100% of each invoice payment immediately
• You pay your own tax through Self Assessment by 31 January
• You may still need to make Payments on Account in July

What GPS Does Not Change

• Materials are still excluded from CIS deductions as normal
• VAT Domestic Reverse Charge still applies if you're VAT-registered
• You still file Self Assessment every year
• Your total tax liability stays the same

Is GPS Worth Applying For?

GPS is worth pursuing if you're earning consistently above the threshold and your compliance record is clean. The cash flow advantage is real — particularly if you're running a van, buying materials upfront, or managing multiple jobs simultaneously.

It's probably not the right move if:

• Your income is irregular and sometimes dips below £30,000
• You've had any late filings or payments in the last 12 months
• You struggle to set money aside for a January tax bill
• You're new to self-employment and still establishing your compliance record

For subcontractors who don't yet qualify — or who prefer the predictability of deductions at source — the focus should be on making sure every pound deducted is correctly accounted for and reclaimed through Self Assessment.