Gross payment status lets a subcontractor be paid with no CIS deduction. Here's what it means and the tests HMRC applies before granting it.
26 June 2026
Most subcontractors under CIS have tax deducted at source, either 20% or 30% depending on their verification. Gross payment status is the exception: it means a subcontractor is paid in full, with nothing deducted, and handles their own tax directly with HMRC. Here's what it involves and how a subcontractor gets there.
If a subcontractor has gross payment status, contractors paying them apply a 0% deduction rate, one of the three CIS deduction rates. The subcontractor still needs to be verified before their first payment, and you as the contractor still need to record the payment on your CIS300 return, just with no deduction against it.
For the subcontractor, gross status means better cashflow, since they're not waiting for a repayment or credit against deducted tax. In exchange, HMRC needs to be confident they'll actually pay what they owe when it's due, which is why the qualifying tests are stricter than ordinary CIS registration.
To be granted gross payment status, a subcontractor generally needs to satisfy HMRC on three broad areas:
The business test. The applicant needs to be running a genuine construction business in the UK, with a business bank account, and be able to demonstrate that the business carries out construction work (or provides labour for it) as its trade.
The turnover test. There's a minimum turnover threshold from construction work (excluding VAT and the cost of materials) that the business needs to meet, looking at turnover over the preceding twelve months. The exact threshold and how it's assessed for smaller partnerships or companies with multiple partners/directors is something HMRC's guidance sets out in detail, so it's worth checking the current figures directly with HMRC or an accountant rather than assuming last year's threshold still applies.
The compliance test. The subcontractor's tax affairs need to be up to date: tax returns filed on time, tax and National Insurance paid when due, and CIS returns (if they're also a contractor) submitted correctly. HMRC generally allows for a small number of minor compliance slips within a rolling period, but persistent or serious non-compliance is likely to mean the application is refused, or existing gross status is withdrawn.
A subcontractor can apply for gross payment status either when they first register for CIS, or later once they believe they meet the tests. Applications can be made through the CIS register or HMRC's online service. HMRC will review the application against the business, turnover, and compliance tests before confirming the outcome.
Gross payment status isn't a one-off award that lasts forever. HMRC reviews compliance on an ongoing basis, and a subcontractor who was previously granted gross status can have it withdrawn if their compliance record slips, for example late filings or missed payments. If that happens, they move back to the standard 20% deduction rate until they requalify.
This is exactly why contractors shouldn't treat a subcontractor's status as fixed once it's been checked. It's worth re-verifying periodically rather than assuming last year's gross status still holds, particularly for subcontractors you use only occasionally.
As a contractor, you're not responsible for whether your subcontractor qualifies for gross status, but you are responsible for applying the rate HMRC's verification actually returns. If verification confirms gross status, you deduct 0%, full stop, regardless of what the subcontractor was on previously or what you might expect. Our guide on verifying a subcontractor with HMRC covers how that check works.
If you're a subcontractor considering applying for gross status yourself, it's worth first checking your own filing and payment history is clean, since even a small compliance gap can be the difference between an approval and a refusal. And if you're setting up as a contractor for the first time and haven't registered yet, our contractor registration guide is the starting point.
Whether a subcontractor is on gross, standard, or unverified status, our CIS statement generator applies the correct rate per subcontractor from the status you record for them, so a mixed team on different statuses is handled the same way as a team that's all on one rate.
For more on getting the fundamentals right, see our guides hub.