Gross payment status: the tests, and how you can lose it
Gross payment status means contractors pay you in full, with no CIS deductions. Here are the tests, the yearly review, and the new ways to lose it.
What it is
With gross payment status, contractors pay you in full, without deductions. You pay all your tax and National Insurance at the end of the tax year. Source: What you must do as a CIS subcontractor: how to get gross payment status.
The tests
You must show HMRC that:
- you have paid your tax and National Insurance on time in the past
- your business does construction work, or provides labour for it, in the UK
- your business is run through a bank account
HMRC also looks at your turnover for the last 12 months. Ignoring VAT and the cost of materials, it must be at least:
| If you are | Turnover at least |
|---|---|
| A sole trader | £30,000 |
| A partnership | £30,000 for each partner, or £100,000 for the whole partnership |
| A company | £30,000 for each director, or £100,000 for the whole company |
| A company controlled by 5 people or fewer | £30,000 for each of them |
Source: What you must do as a CIS subcontractor: how to get gross payment status.
The annual review
HMRC reviews your business every year to decide if you can keep gross payment status. You must be on time with your tax returns and payments. A small amount of late payments or returns is allowed.
If you are about to fail, HMRC writes with the reasons, and you can reply with yours. If HMRC does not accept them, it writes again to say it is withdrawing gross payment status in 90 days, and you have 30 days from that letter to appeal. After a cancellation you wait a year before you can reapply. Source: What you must do as a CIS subcontractor: annual review.
Losing it at once: the April 2026 rules
Since 6 April 2026 HMRC can cancel gross payment status at once where a business knew or should have known that payments it made or received were connected with fraudulent evasion of tax. The wait before you can reapply is then 5 years, not one. The business can also be made liable for the lost tax, with a penalty of 30% of it that can also reach its directors and other people connected to the business. Source: Tackling Construction Industry Scheme fraud (policy paper, 26 November 2025).
The other grounds for cancelling it at once are giving false information when registering for it, fraudulently making an incorrect return or giving incorrect information, and knowingly failing to meet a CIS obligation. Source: Tackling Construction Industry Scheme fraud (policy paper, 26 November 2025).
HMRC calls "knew or should have known" an objective test: what a reasonable business in your position would have spotted. Source: HMRC manual CISR85060: 'knew or should have known' principles. The policy paper says the measures should not affect compliant businesses that do the due diligence needed. Checks you have recorded on the firms you pay, and the firms that pay you, are how you show it.
Changes to tell HMRC about
- If you add new shareholders, HMRC may withdraw gross payment status if you do not tell it within 30 days.
- If you change your business structure, for example from a sole trader to a company, you will usually need to register again for CIS, and apply again for gross payment status.
Source: What you must do as a CIS subcontractor: changes you need to report.
If you are also a contractor, HMRC may cancel your own gross payment status if you do not operate the scheme correctly. Source: Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340).
Questions people ask
How long before I can reapply for gross payment status?
If HMRC cancels it after an annual review you fail, you wait a year. If HMRC cancels it at once because it decides you knew or should have known that payments were connected with fraudulent evasion of tax, you wait 5 years.
Can I lose gross payment status because of a subcontractor?
Yes. Since 6 April 2026 HMRC can cancel it at once where a business knew or should have known that payments it made or received were connected with fraudulent evasion of tax. Checks you have recorded are how you show you could not have known.
Can a labour provider get gross payment status?
Yes, if it passes the tests. One of them is that the business does construction work, or provides labour for it, in the UK.
Read on GOV.UK on 26 October 2026. If GOV.UK changes, we change this page.
More guides
- CIS changes April 2026: the new fraud rulesWhat changed on 6 April 2026, and what "knew or should have known" means.
- How to verify a subcontractor with HMRCWhen you must verify, what you need, and the reference to keep.
- CIS supply chain due diligenceThe test in HMRC's words, the signs it names, and what to record.
- Check a company before paying a subcontractorWhat the Companies House register shows, and what it cannot.
Wherever you build: CIS checks across the UK.