With gross payment status, GOV.UK says "contractors will pay you in full, without deductions. You'll pay all your tax and National Insurance at the end of the tax year." To get it, your business has to pass three tests: turnover, business and compliance. This guide sets out what each one looks at, from GOV.UK and HMRC's CIS manual, for sole traders. It also explains why the 2025–26 tax return due on 31 January 2027 matters if you're thinking of applying in 2027.
The short answer
GOV.UK's gross payment status page says you must show HMRC:
- "you've 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"
And for a sole trader, turnover "for the last 12 months", "ignoring VAT and the cost of materials", of at least £30,000.
HMRC's manual (CISR43020) says: "Each of these tests must be passed in order to qualify for gross payment status."
Test 1: turnover
The period. The manual (CISR44110) says the test period is "the preceding 12 month period ending on the date of application". It's not the tax year.
The threshold. For a sole trader, "£30,000 in the 12 month period preceding the date of application" (CISR44100). The manual adds that you can't apply "on a 'proportional' basis", for example with £12,000 over 4 months.
What counts. CISR44130 works it out as gross construction turnover less related materials:
- Gross construction turnover "includes any payments under contracts relating to construction operations", and can include work for private householders and businesses that aren't CIS contractors. It doesn't include VAT, or turnover from activities "not directly involving the carrying out of construction work".
- Related materials include "land, building materials and consumable items", "fuel for plant", "the actual cost incurred for plant hire" and any CITB levy.
- Not materials: "subsistence expenses", "fuel for travelling" and scaffolding bought by scaffolding subcontractors.
So your CIS statements may not show all of it. Work for householders doesn't come with a CIS statement at all. GOV.UK's application page asks for "evidence of turnover — such as bank statements, payment and deduction statements and invoices".
Test 2: business
You confirm that you carry out construction work in the UK and give a bank account the business is run through. The manual (CISR43020) says HMRC's system checks the account details are valid, and can't verify building society accounts, foreign bank accounts, old accounts or recently opened ones.
Test 3: compliance
This is where the 31 January deadline comes in. The manual (CISR46020) says a sole trader must have done all of the following in the 12 months to the date of application, including:
- "sent in any SA return due within that period"
- "paid their own NICs"
- "complied with all requests for accounts or other relevant information"
There are more conditions if you're also a contractor, an employer or VAT registered. The manual stresses that the obligations must have been met "within the time allowed in law".
What HMRC can and can't overlook
CISR46080 lists the failures HMRC may disregard. For a Self Assessment return, it can overlook "Any Income Tax or Corporation Tax Self Assessment return made not later than 28 days after the due date". It can't overlook:
- a return "made later than 28 days after the due date"
- "Any Income Tax SA return due in the qualifying period but outstanding at the date of application"
- "Any late payment of National Insurance contributions"
The manual allows failures outside these limits to be ignored only where you had a "reasonable excuse".
If you can't pay on time
GOV.UK's annual review page says that if HMRC gives you more time to pay, "this will not affect your gross payment status". For applications, the manual (CISR43090) says a Self Assessment time to pay arrangement with "a start date before the due date" means the debt isn't treated as due until the arrangement ends. If the arrangement starts after the due date, the test fails where the due date falls in the 12 months.
Worked example (made-up figures and dates)
Priya is a sole trader who isn't VAT registered. Every figure and date here is invented. She's thinking of applying on 1 March 2027, so her 12 months run from 1 March 2026 to 28 February 2027.
Turnover. From her statements and invoices for those 12 months:
| Amount | |
|---|---|
| Paid by CIS contractors (from statements) | £33,000 |
| Paid by householders (from her invoices) | £8,000 |
| Gross construction turnover | £41,000 |
| Less related materials | (£9,500) |
| Net turnover | £31,500 |
That's above £30,000. Counting only her CIS statements, she'd have £33,000 less the materials on those jobs, which could take her below the line. Her statements also run by tax month (6th to 5th), so the one for the month ending 5 March 2026 can include payments made before 1 March. Payment dates on the statements and invoices show which side of the start date each payment falls.
Compliance. Her 2025–26 return is due online by 31 January 2027 (GOV.UK's deadlines page), which is inside her 12 months. Three versions of what she does:
| 2025–26 return sent | Against CISR46080 |
|---|---|
| By 31 January 2027 | On time |
| 20 February 2027 (20 days late) | Late, but within the 28 days the manual says HMRC can overlook |
| Not sent by 1 March 2027 | "outstanding at the date of application": can't be overlooked |
The same goes for paying. Any tax and National Insurance due on 31 January 2027 is part of the record HMRC checks. The decision is HMRC's, and these are only the manual's rules applied to invented dates.
Keeping it, and losing it
GOV.UK says that with gross payment status, HMRC "will review your business every year", and "You must be on time with your tax returns and payments to keep your gross payment status." If you're about to fail, you get a letter and can reply. If HMRC goes ahead, it writes saying it's withdrawing the status "in 90 days", and you have 30 days to appeal. After a cancellation, you "need to wait a year" before reapplying.
From 6 April 2026, HMRC's policy paper says it can cancel gross payment status immediately where a business "knew or should have known" a transaction was connected with tax fraud, and the reapplication bar in those cases rises "from one year to 5 years".
FAQ
How do I apply? GOV.UK's sole trader page has an online form. You'll need your National Insurance number, UTR, VAT number if you have one, turnover for the last 12 months, evidence of it, and bank details. There's also a postal form, CIS302.
How long does it take? GOV.UK doesn't give a fixed time. HMRC's check when you can expect a reply tool covers CIS.
I'm being taxed at 30%. Is gross payment status the fix? They're separate questions. Our guide Taxed at 30% under CIS? covers registration and verification.
How do I add up my statements for my return? See How to add up your CIS deductions for your tax return.
Adding up 12 months of statements
cissplit reads your CIS statements (PDFs or photos) and checks the deduction rate on each one. It flags gaps and duplicate months, and lists every statement by contractor and tax month, with gross, materials and deductions. That gives you the contractor side of a 12-month turnover figure, ready to add to your own invoices for other work. Your first 3 statements are free, with no sign-up. To check a single deduction, the free CIS deduction check follows GOV.UK's rule. cissplit doesn't apply for gross payment status or tell you whether you'd pass, and you still check the figures against your statements.
This isn't tax advice. Check GOV.UK's guide to gross payment status or an accountant for your situation, and check the figures before you submit anything.