How do I get gross payment status under CIS?

Apply to HMRC online or by post. In October 2026 a sole trader needs £30,000 of construction turnover, excluding VAT and materials, in the last 12 months, a clean compliance record and a bank account the business runs through.

Gross payment status means contractors pay you in full with no Construction Industry Scheme (CIS) deduction. You then pay all your Income Tax and National Insurance after the tax year ends. To get it, GOV.UK says your business must pass three tests: a business test, a turnover test and a compliance test.

The three tests

The turnover test in detail

For a sole trader, the threshold is £30,000. A partnership needs £30,000 for each partner, or £100,000 for the whole firm. A company needs £30,000 for each director, or £100,000 in total. If a company is controlled by 5 people or fewer, GOV.UK says it needs £30,000 for each of them.

HMRC's manual works out net turnover as gross construction turnover less related materials. Materials here include building materials and consumables, fuel for plant, plant hire costs and any Construction Industry Training Board (CITB) levy. Fuel for travelling and subsistence are not materials. Work for householders counts, as long as it is construction work.

There is no pro rata. The manual says £12,000 in 4 months does not pass, so you need a full 12 months of trading behind you.

The compliance test in detail

For a sole trader, HMRC looks at the 12 months up to the date you apply. You must have sent any Self Assessment return due in that period, paid your own National Insurance, and answered any HMRC requests for information. If you are VAT registered or a contractor yourself, those returns and payments count too.

HMRC can overlook a few slips, set out in its manual:

• a Self Assessment return up to 28 days late
• up to 3 VAT returns, and up to 3 contractor returns, each up to 28 days late
• up to 3 late payments of £100 or more for each of VAT, PAYE and CIS, each up to 14 days late
• any late payment under £100

Anything worse fails the test unless you had a reasonable excuse. That includes a return more than 28 days late, a payment of £100 or more more than 14 days late, any late National Insurance, or a return still outstanding when you apply.

What this means for you

Gross status helps cash flow, because you are paid the full amount and hold the money until your tax is due. The trade-off is discipline. With no deductions taken, the whole bill lands at once, and payments on account may follow for the next year. You need to put money aside every month.

It also has to be kept. HMRC reviews gross status every year, and you must stay on time with returns and payments. If HMRC withdraws it, you get 90 days' notice and 30 days to appeal, then you must wait a year to reapply. From 6 April 2026, HMRC can cancel it immediately where a business knew or should have known a payment was connected to fraud, with a penalty of up to 30% of the lost tax and a 5-year bar on reapplying.

Steps to apply for gross payment status

1. Add up your construction turnover for the last 12 months, less VAT and the materials, plant hire and fuel for plant you paid for. You need at least £30,000 as a sole trader.
2. Check your compliance record for the same 12 months: your last tax return filed on time, National Insurance paid, and VAT returns and payments on time if you are registered.
3. Make sure the business runs through a bank account, which HMRC checks.
4. Gather evidence of turnover, such as invoices and payment and deduction statements, as HMRC may ask for it after accepting the application.
5. Apply online or by post using the sole trader form on GOV.UK. If you are not yet registered for CIS, this registers you too.
6. Once approved, keep filing and paying on time and set aside money for your tax bill.

Use the free MTD check to see when Making Tax Digital starts for you, and the trades section has more guides on CIS.