Gross payment status means contractors pay qualifying CIS amounts without withholding deductions. You still have to report the income and pay the tax. Eligibility depends on HMRC’s business, turnover and compliance tests; approval is not a tax exemption.
What changes — and what does not
- Changes: cash arrives without CIS withheld; monthly deduction statements for CIS deductions are generally not required when nothing was deducted.
- Does not change: the need to register and report income correctly; employment vs self-employment status (gross status alone does not decide that); the duty to budget for tax.
Who can apply — current GOV.UK tests
HMRC looks at whether your business:
- has paid tax and National Insurance on time in the past (compliance test)
- does construction work (or provides labour for it) in the UK (business test)
- is run through a bank account
HMRC also looks at turnover for the last 12 months, ignoring VAT and the cost of materials. GOV.UK currently states the turnover must be at least:
- £30,000 if you are a sole trader
- £30,000 for each partner, or at least £100,000 for the partnership as a whole
- £30,000 for each company director, or at least £100,000 for the company as a whole
Recheck the live GOV.UK page before you apply — thresholds and tests can be updated.
How to apply
GOV.UK lets you apply online or by post. Applying for gross payment status also registers you for CIS if you are not already registered. Keep bank evidence and compliance history tidy before you submit.
Paying tax with gross status
Sole traders and partners still declare income on Self Assessment. Company owners use the Corporation Tax return for company profits. Without CIS deductions sitting on account, you must actively set money aside — otherwise January (or company payment dates) becomes a cash shock. Compare that with people on net payment status who may later see CIS refunds when deductions exceed the final bill.
When gross status may not suit you
If your compliance history is uneven, turnover is below the test, or you prefer contractors to withhold something towards tax, staying on 20% net payment status can be simpler. Gross status is a cash-flow tool, not a badge that reduces the tax you ultimately owe.
Gross payment status also does not decide Making Tax Digital eligibility. You can be paid gross under CIS and still need digital records and quarterly updates if qualifying income brings you into MTD — or be outside MTD while still on CIS deductions. Separate the two: use Check if MTD applies for the digital-reporting question, and keep Self Assessment (or company filing) for the tax bill itself.
TaxSimba helps self-employed subcontractors through our Self Assessment service once income needs reporting — including after a move to gross payment status. We do not process HMRC gross-status applications as a standalone product on this page, and we do not guarantee approval. Start Self Assessment with TaxSimba when you want accountant-led filing support.
Budget for tax after deductions stop
Illustrative preparation example.
Your contractor begins paying without CIS deductions after gross-payment approval. Keep recording the full income and set a separate plan for the tax liability. A larger bank receipt is not necessarily extra profit available to spend.
Check: How will the tax be funded now that the contractor is not withholding it?
| Check | Practical action |
|---|---|
| Do you meet HMRC's current application tests? | Check the business, turnover and compliance requirements before applying. |
| Has the contractor verified the new status? | Confirm the effective treatment and keep the payment records. |
| Is tax being reserved without withholding? | Update cash-flow planning and keep filing and payment obligations on schedule. |
Does gross status remove Self Assessment?
No. Sole traders still need to report and pay through the applicable tax process. Companies have their own obligations.
Can gross status be lost?
HMRC reviews compliance. Keep records, returns and payments up to date and read any review or cancellation notice carefully.
Download a checklist for this guide
- Check eligibility and the relevant turnover calculation.
- Review outstanding returns and tax payments.
- Retain the application outcome and effective details.
- Confirm contractor verification.
- Update the tax reserve and compliance calendar.