CIS Gross Payment Status: How It Works, Who Can Apply, and What Contractors Must Do

Introduction

The Construction Industry Scheme (CIS) sets strict rules on how contractors must handle tax for subcontractors. Normally, contractors deduct 20% tax from subcontractor payments before passing the remainder on.

But there’s an exception: Gross Payment Status (GPS). If approved by HMRC, subcontractors can be paid in full, without deductions, and handle their tax through Self Assessment or Corporation Tax.

This article explains what Gross Payment Status is, who can apply, and what contractors need to do to verify it.

What Is Gross Payment Status?

• Normally, CIS subcontractors have 20% tax deducted at source by their contractor.

• With Gross Payment Status, subcontractors receive their payments in full (gross).

• They are then responsible for declaring and paying their tax to HMRC directly.

👉 This can be a major cashflow benefit for subcontractors, but it also comes with more responsibility.

Who Can Apply for Gross Payment Status?

Only subcontractors can apply for GPS — contractors cannot apply on their behalf.

To qualify, subcontractors must show HMRC that they:

• Have a good compliance history (paying tax and filing returns on time).

• Run their business through a bank account.

• Operate within the construction industry.

Applications are made directly to HMRC when registering for CIS, or later if already registered.

How Contractors Verify Gross Payment Status

Contractors cannot simply take a subcontractor’s word that they have GPS. They must verify it with HMRC before paying gross.

• Contractors must check each subcontractor’s CIS status with HMRC.

• HMRC then confirms whether to pay the subcontractor:
  
  

  • Gross (if they have GPS).

  • 20% deduction (standard).

  • 30% deduction (if the subcontractor isn’t registered for CIS).

  • Failure to verify properly can leave the contractor liable for unpaid tax.

Why It Matters

For Subcontractors

• Gross Payment Status improves cashflow — you keep more money upfront.

• But you must be disciplined in setting aside tax to pay later.

For Contractors

• Verifying GPS correctly protects you from HMRC penalties.

• Paying a subcontractor gross without confirmation from HMRC can make you liable for their unpaid tax.

How Wexley & Associates Supports Clients

• CIS Registrations – We ensure subcontractors are properly registered and advise on applying for GPS.

• Verification Process – We handle HMRC checks for contractors so they always pay correctly.

• Compliance Monitoring – We keep clients on top of their tax filing so they maintain eligibility for GPS.

• Cashflow Planning – For subcontractors with GPS, we help set aside funds to avoid tax shocks at year-end.

The Verdict

Gross Payment Status can be a powerful benefit for subcontractors, but only if managed correctly. Contractors must also be diligent in verifying status to avoid HMRC liabilities.

With Wexley & Associates, both subcontractors and contractors stay fully compliant with CIS rules — and avoid the costly pitfalls of non-compliance.

👉 Wexley & Associates: making CIS compliance simple, for both subcontractors and contractors.

References & Further Insight

• HMRC: CIS – Gross Payment Status

• Related reading: VAT in Construction: What Every Contractor and Developer Needs to Know