Every time a contractor pays you under CIS, 20% of your labour disappears to HMRC before you see it. Gross Payment Status ends that. Here's exactly what it takes to qualify, how to apply, what to do if you're refused — and how to keep it once you have it.
The 60-second version
- GPS means 0% deducted. Your contractor pays 100% of your labour invoice and you pay your own tax through Self Assessment. Your total tax bill doesn't change — only the timing does.
- You must pass three HMRC tests: business, turnover (£30,000 net for sole traders) and compliance (12 months of on-time returns and payments — including VAT since April 2024).
- Apply through your HMRC online account or by calling the CIS helpline on 0300 200 3210.
- GPS can be taken away. One late return or payment can cost you a year of full cash flow.
Quick question: how much of your last labour invoice actually landed in your account? If you're a registered subcontractor, the answer is 80%. The other 20% went to HMRC before you ever saw it — and it stays there until after the tax year ends, you file your Self Assessment, and HMRC processes your refund.
Gross Payment Status (GPS) changes that. With GPS, contractors pay you every penny of your invoice, and you handle your own tax. It's the difference between lending HMRC a fifth of your labour income interest-free and having your full cash flow available week to week.
"GPS isn't a tax cut. For a subcontractor billing £60,000 of labour a year, it's £12,000 of working capital that stays in the business instead of waiting to be reclaimed from HMRC."
What Is Gross Payment Status — and What Isn't It?
Under standard CIS, your contractor deducts tax from the labour element of your invoice and passes it to HMRC as an advance payment towards your tax bill. GPS is an exemption from that rule. HMRC grants it to subcontractors with a proven record of paying their own tax correctly and on time. When a contractor verifies you and sees "gross", they pay you in full.
| Subcontractor status | Deduction rate | Cash flow impact |
|---|---|---|
| Not registered for CIS | 30% | Severe — nearly a third withheld |
| Registered (standard) | 20% | Significant — wait for a refund after the tax year |
| Gross Payment Status | 0% | None — full invoice paid |
What GPS Is Worth in Cash
Every £1,000 of Labour — Without vs With GPS
Scale that up: on £40,000 of labour a year, GPS keeps £8,000 in your account instead of with HMRC. On £60,000, it's £12,000. Without GPS, money deducted early in a tax year can sit with HMRC for well over a year before it comes back to you.
Not on GPS yet? Everything already deducted can be reclaimed — see how much HMRC owes you.
Try the free CIS refund calculator →The Three Tests You Must Pass to Qualify
HMRC applies three tests to every application, and you must pass all three. None of them are flexible — HMRC checks your actual records, not what you tell them.
1. The Business Test
You must be carrying out construction work in the UK (or be a contractor paying others to do it), and your business must be run through a UK bank account. Most physical trades — groundwork, brickwork, carpentry, electrical, plumbing, plastering, roofing, glazing, painting and decorating — fall within CIS. If you're working under CIS legitimately, you'll almost certainly pass this one.
2. The Turnover Test
This is where many applicants are screened out. HMRC looks at your net construction turnover over the last 12 months:
GPS Turnover Thresholds
3. The Compliance Test
This is the test that catches the most applicants. HMRC checks your full tax record for the 12 months before you apply:
✓ Passes
- Every Self Assessment return filed on time
- All income tax and NIC paid on time, including Payments on Account
- VAT returns filed and paid on time (if VAT-registered)
- CIS monthly returns filed (if you're also a contractor)
- PAYE/RTI submissions and payments on time (if you employ anyone)
✗ Triggers refusal
- A late Self Assessment return — even by a few days
- Any overdue tax balance
- A late VAT return or payment
- A late CIS monthly return as a contractor
- A late payroll submission or payment
- Serious tax non-compliance
The GPS Pre-Check: Do This Before You Apply
The most common reason for refusal is a compliance issue the applicant didn't know existed — a small underpayment, a return filed a few days late, a VAT payment that cleared after the deadline. HMRC's system sees all of it. Work through this list first:
- Log in to your HMRC online account and check for any outstanding returns or balances
- Confirm your latest Self Assessment was filed and paid on time
- If VAT-registered, confirm every VAT return in the last 12 months was filed and paid on time
- Check your net construction turnover for the last 12 months meets your threshold
- Make sure your UTR and CIS registration are active and linked to the right business
- If you're also a contractor, confirm all CIS monthly returns are filed
- If you employ anyone, confirm all payroll submissions and payments were on time
If anything is outstanding, sort it first, give HMRC's systems a few days to update, then apply. A problem visible on HMRC's system when you apply means a refusal.
How to Apply for Gross Payment Status, Step by Step
- Make sure you're registered for CIS. You can't have GPS without CIS registration. New subcontractors can apply for GPS at the same time as they register — and if you're not registered at all, you're currently losing 30%.
- Run the pre-check above. A refusal costs you time; checking first costs you ten minutes.
- Apply online or by phone. Go to the CIS section of your HMRC online business tax account, or call the CIS helpline on 0300 200 3210 (Monday to Friday, 8am to 6pm) with your UTR ready. Limited companies apply using the company UTR, not the director's personal one. Paper forms also exist — check gov.uk for the current version.
- Wait for HMRC's decision. HMRC reviews your compliance history before deciding, so allow several weeks. You'll get written confirmation either way.
- Tell your contractors. Once approved, your status is updated in HMRC's CIS verification system. Let every contractor know so they check your status and stop deducting.
- Set aside tax from day one. Nothing is withheld any more, so open a separate "tax" account and move a fixed share of every payment into it — many subcontractors use 20–30%.
What If Your GPS Application Is Refused?
HMRC must give you written reasons. Read the letter carefully — it will name the specific test you failed. You then have three options:
- Appeal within 30 days if you think HMRC got it wrong — for example, a return they've flagged as late that you can prove was on time. Send evidence such as payment confirmations or HMRC correspondence.
- Fix the issue and reapply once you've built a clean 12-month compliance record. There's no penalty for reapplying.
- Keep working under 20% in the meantime — and make sure every deduction is reclaimed through Self Assessment.
A groundworker applies for GPS but is refused because a VAT return went in six days late eight months earlier. He sets up Direct Debits for every HMRC payment, files every return ahead of its deadline for the next 12 months, and reapplies.
Result: approved on the second application.
How to Keep GPS Once You Have It
GPS isn't granted once and forgotten. HMRC reviews GPS holders regularly and can cancel the status if compliance slips — and losing it mid-year hurts more than never having it, because 20% deductions restart from the next payment you'd already planned to spend.
| What goes wrong | What can happen |
|---|---|
| Late Self Assessment return | GPS cancelled — 20% deductions resume |
| Late tax, NIC or Payment on Account | GPS cancelled |
| Late VAT return or payment | GPS cancelled (since April 2024) |
| Turnover falls below the threshold | GPS removed at review |
| False information or fraud | Immediate cancellation and possible investigation |
If HMRC cancels your GPS, you'll get a written notice and have 30 days to appeal if you believe it's wrong.
The Non-Negotiables
- File your Self Assessment well before 31 January — aim for November or December at the latest
- Pay every bill on time, including Payments on Account (31 January and 31 July)
- Keep VAT returns and payments on schedule if you're registered
- If you employ anyone, never let a payroll submission or payment slip
- Put every HMRC payment you can on Direct Debit
- Move your tax share into a separate account the day each payment lands
A plasterer earning £65,000 a year gets GPS after two years of clean compliance. Over the next eight months, around £8,700 that would otherwise have been deducted stays in his account.
Then a VAT payment goes in 12 days late because of a bank transfer delay. HMRC's review flags it and his GPS is cancelled.
The lesson: the discipline that wins GPS is the same discipline that keeps it. Direct Debits for every HMRC obligation remove the risk.
What GPS Changes — and What It Doesn't
What changes
- No 20% withheld from your labour payments
- You receive 100% of each payment
- You pay your own tax through Self Assessment
- You may need to make Payments on Account
What doesn't change
- Materials are still outside the CIS deduction
- The VAT Domestic Reverse Charge still applies if you're VAT-registered
- You still file a Self Assessment every year
- Your total tax liability stays the same
Is GPS Right for You?
GPS is worth pursuing if you earn consistently above the threshold and your compliance record is clean — especially if you run a van, buy materials upfront, or juggle several jobs. It's probably not the right move yet if:
- Your income is irregular and sometimes dips below the threshold
- 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 building a compliance record
If that's you, focus on making sure every pound deducted is claimed back correctly through Self Assessment — CIS deductions go in Box 38 on the SA103S or Box 82 on the SA103F. That includes deductions taken before you get GPS: they're still yours to reclaim.
Frequently Asked Questions
What is CIS Gross Payment Status?
Gross Payment Status (GPS) is an HMRC authorisation that lets CIS subcontractors receive 100% of their labour payments with no CIS deduction. Instead of the contractor withholding 20% (or 30% if you're unregistered), you receive the full amount and pay your own tax through Self Assessment. Your total tax bill stays the same.
Who qualifies for Gross Payment Status?
You must pass three tests: a business test (construction work in the UK, run through a UK bank account), a turnover test (£30,000 net construction turnover for sole traders; £30,000 per partner or director, or £100,000 total, for partnerships and companies) and a compliance test (all returns filed and all tax paid on time for the last 12 months, including VAT since April 2024).
How do I apply for Gross Payment Status?
Apply through the CIS section of your HMRC online business tax account, or call the CIS helpline on 0300 200 3210 (Monday to Friday, 8am to 6pm) with your UTR ready. New subcontractors can apply when they register for CIS. HMRC checks your 12-month compliance record before deciding, so allow several weeks.
Can a limited company get Gross Payment Status?
Yes, on the same three tests. The turnover test is £30,000 net per director or £100,000 total, and the compliance test covers the company's Corporation Tax, PAYE and VAT record as well. Apply using the company UTR, not the director's personal UTR.
What happens if my GPS application is refused?
HMRC must give you written reasons. You can appeal within 30 days if you believe the decision is wrong. Otherwise, fix the issue and reapply once you have a clean 12-month compliance record. In the meantime you keep working under the 20% deduction and reclaim any overpayment through Self Assessment.
Can HMRC remove my Gross Payment Status?
Yes. HMRC reviews GPS holders regularly and can cancel the status if you file or pay late (including VAT), your turnover falls below the threshold, or there's serious non-compliance. You'll receive a written notice and have 30 days to appeal.
What happens to CIS deductions taken before I got GPS?
They're still yours. Claim them back through your Self Assessment return — Box 38 on the SA103S or Box 82 on the SA103F. HMRC offsets them against your tax bill and refunds any overpayment.
This article is for general information only and does not constitute tax advice. HMRC rules can change — always check gov.uk or speak to a qualified adviser about your circumstances. QuoteDone is not affiliated with or endorsed by HMRC.