Gross payment status (GPS) is a CIS registration that allows subcontractors to receive the full contract payment without any CIS deduction at source. Instead of the contractor withholding 20 or 30 per cent, the subcontractor receives the gross amount and accounts directly to HMRC through Self Assessment.
Why GPS matters
For a subcontractor turning over £95,000 a year at the standard 20 per cent registered rate, the contractor withholds approximately £19,000 across the year (on the labour element). That £19,000 is returned through Self Assessment, but only after the return is filed and processed. GPS eliminates the wait entirely. The subcontractor retains the cash throughout the year, improving working capital and potentially removing the need for invoice-finance facilities.
The three-test scorecard
HMRC grants GPS after an assessment of three conditions:
1. Business test
The business must be carrying out construction operations or furnishing labour for construction operations. Compliance with CIS registration requirements is also assessed here.
2. Compliance test
The applicant (and connected persons) must have a satisfactory tax compliance record: returns filed on time, payments made on time, no serious tax failures in the relevant period. HMRC looks at the CIS record, Self Assessment and VAT where applicable. A single late return or payment can be enough to fail the compliance test.
3. Turnover test
The annual CIS turnover must meet the qualifying threshold. For 2026/27 the thresholds are:
- Sole trader: £30,000
- Partnership: £30,000 per partner, OR £100,000 for the whole business (either route passes)
- Limited company: £30,000 per director, OR £100,000 for the whole company (either route passes)
- Closely controlled company: £30,000 per controller (no whole-business route)
Example: a three-partner partnership with CIS turnover of £95,000 passes the per-head route (£90,000 threshold) even though the whole-business route (£100,000) is not met. The corrected rule means EITHER route is sufficient for partnerships and limited companies.
The Finance Act 2026 anti-fraud regime
Finance Act 2026 introduced significant changes to GPS designed to combat supply-chain fraud in the construction industry.
Five-year disqualification
Where HMRC establishes that GPS was obtained or used fraudulently, or that a criminal conviction for a relevant offence has been made, a five-year GPS disqualification can be imposed. The disqualification applies to the individual, company and connected persons. The firm and its principals cannot hold GPS status during the disqualification period.
Due diligence obligations
GPS holders are expected to maintain records showing that reasonable due diligence was performed on their own supply chain. Where a GPS holder engages unregistered or non-compliant sub-subcontractors, HMRC may treat this as a factor in compliance review. While the Act does not create strict liability for supply-chain failures, the due diligence record is now a material consideration in GPS review.
Revocation on suspicion
HMRC's powers to revoke GPS were broadened. HMRC can now revoke GPS where it has reasonable grounds to suspect non-compliance, pending investigation. This is a provisional revocation: the contractor must immediately apply 20 per cent deductions again until the status is restored. The practical consequence is that a subcontractor can lose GPS temporarily even before any finding of fault.
How to apply
GPS applications are made through CIS online. You will need to provide your UTR, CIS registration details and the turnover figure for the most recent 12-month period. HMRC typically processes applications within 40 working days, though complex cases can take longer.
Check your compliance record before applying. Any outstanding returns or balances should be resolved first. An application made while compliance issues exist is likely to be refused, and a refused application does not reset the clock.
Maintaining GPS
GPS is not automatic once granted. HMRC reviews GPS status annually and may remove it if the compliance or turnover tests are no longer met. New partners, directors or controllers change the per-head threshold and must be notified to HMRC. A business that grows or changes structure needs to re-assess which route it relies on.
The cash-flow gain in practice
The gain from GPS is a cash-flow improvement, not a permanent tax saving. The liability remains the same: you still file Self Assessment and pay income tax and Class 4 NI on your profit. The difference is that you hold the cash throughout the year rather than waiting for HMRC to refund it.
At higher turnover levels the gain is material. A subcontractor with £150,000 of CIS labour turnover at the 20 per cent rate retains £30,000 more cash through the year under GPS. That cash can fund equipment, reduce overdraft balances or fund growth without external finance.
Using the GPS readiness model
The GPS readiness model (included with this guide) lets you enter your entity type, number of partners or directors, turnover and CIS deduction rate. The model applies the corrected turnover test (per-head route and, for partnerships and limited companies, the whole-business route) and shows whether you pass, which route you passed on, and the annual cash-flow gain if GPS is granted.
This model covers the turnover test. The compliance and business tests require a review of your actual HMRC record. Speak to a specialist to assess your full position before applying.