What Gross Payment Status means
Gross Payment Status (GPS) is HMRC’s approval for a subcontractor to receive CIS payments without deduction. Instead of a contractor deducting 20% and passing it to HMRC, the subcontractor receives the full payment and manages their own tax liability through their tax return or company accounts.
GPS is valuable because it improves cash flow significantly. A subcontractor receiving £50,000 per month gross receives £50,000. A subcontractor on the standard 20% rate receives £40,000 and must wait until the end of the tax year to reclaim the £10,000 withheld. For businesses with tight margins or seasonal variation, that £10,000 per month difference is material.
Who qualifies for GPS
HMRC applies three tests to GPS applications. The business test requires that construction work is a genuine part of the business, not an occasional activity. The turnover test sets minimum annual turnover from construction work: £30,000 for sole traders, £30,000 per director (up to £100,000) for companies, and equivalent thresholds for partnerships. The compliance test requires all tax returns to be filed on time and all tax paid on time for the preceding 12 months.
The compliance test is the one most applicants fail. A single late return or missed payment in the past year will result in rejection. HMRC checks thoroughly.
What changed in April 2026
Before April 2026, GPS revocation required a formal process — HMRC would notify the subcontractor, who had the opportunity to appeal before GPS was removed. From April 2026, HMRC can revoke GPS immediately, with no advance notice, and ban the subcontractor from reapplying for five years.
This is the most significant CIS change in years. A contractor on a £2 million project can lose GPS mid-contract, triggering immediate 20% deductions on all subsequent payments, with no appeal window and no reapplication for five years.
The triggers for immediate revocation include: false invoices, deliberately overclaiming materials, using fraudulent identities, or being linked to supply chain fraud — even if the GPS holder was unaware. The “should have known” standard means due diligence on who you work with is now a legal requirement.
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Book a Free Check →How to protect GPS once you have it
GPS survives only if the underlying compliance record stays clean. Every tax return filed on time. Every payment to HMRC made on time. No gaps, no promises, no extensions. HMRC reviews GPS holders annually and can initiate a review at any point if something triggers their attention.
The practical steps: set a calendar reminder 60 days before each tax deadline. Do not rely on reminders from HMRC — they do not always arrive in time to act on. If you have a payment on account that you cannot meet, contact HMRC before the deadline, not after.
If you run PAYE employees alongside CIS subcontractor work, late RTI submissions can also affect GPS. The compliance requirement covers all tax obligations, not just CIS.
What contractors must do when a subcontractor holds GPS
Having a verification reference showing GPS does not mean you can pay at 0% indefinitely. GPS can be revoked at any point. Before every new project or payment cycle, re-verify any subcontractor showing as GPS. If HMRC has revoked their status since the last check, paying at 0% means you are liable for the 20% deduction you failed to make.
This is not theoretical risk — it is the exact scenario the April 2026 reforms were designed to address. Verification takes less than five minutes. The cost of not doing it is potentially the entire deduction amount plus interest and penalties.