CIS: Gross Payment Status (GPS) Turnover Test

What is Gross Payment Status (GPS) under CIS?

The Gross Payment Status (GPS) turnover test under the Construction Industry Scheme (CIS) applies to subcontractors. It allows them to receive payments without deductions of CIS tax. In other words, subcontractors with GPS can be paid gross, which means no standard 20% deduction at the source.

If you have already registered for CIS, you can apply for GPS online through the HMRC website.

Gross Payment Status (GPS) enables workers to be paid gross with no CIS deductions

Requirements to Qualify for Gross Payment Status (GPS)

To qualify for GPS, subcontractors must meet specific criteria. Here are the three main tests you need to pass:

1. Business Test

You must be genuinely carrying out construction work in the UK while operating in a business-like manner. This involves maintaining a business bank account, keeping proper records, and issuing invoices for your services.

2. Turnover Test

Your net construction income, which excludes VAT and material costs, must meet a minimum threshold in the 12 months before applying for GPS:

Entity Type	Required Turnover (Last 12 Months)
Sole Trader	£30,000
Partnership	£30,000 per partner or £100,000 total
Company	£30,000 per director/shareholder or £100,000 total

3. Compliance Test

Lastly, applicants must maintain a good compliance record with HMRC. This includes:

• Submitting all tax returns on time

• Paying all tax and National Insurance contributions promptly

• Having no serious record of non-compliance

  
  

Summary of GPS Qualification Criteria

To qualify for Gross Payment Status under the CIS and receive gross payment without deductions, a subcontractor must:

• Operate a legitimate construction business

• Meet the required turnover threshold from construction work

• Maintain good compliance with HMRC requirements

  
  

Important Points to Note

It’s crucial to understand GPS can be withdrawn by HMRC and is not automatically reinstated. Losing your GPS status may lead to penalties, affect cash flow, damage your reputation, and create additional administrative work. Understanding these risks can help you approach your business operations with caution.

This document serves as a simplified help sheet. Always conduct thorough research if you are uncertain about any aspect of GPS.

Need Further Assistance?

If you need more information, please contact us today for tailored help and advice. Verifiable Accounts are qualified accountants that offer accounting, bookkeeping, tax, and business advisory services.