CIS Gross Payment Status Explained for Subcontractors
What CIS gross payment status is, how it differs from 20% and 30% deductions, the qualifying tests, how to apply, and what it means for cash flow and MTD reporting.
The short answer
Gross payment status lets a CIS subcontractor be paid in full with no tax deducted, settling their tax through Self Assessment / MTD instead. It's better for cash flow than the standard 20% (registered) or 30% (unregistered) deductions, but you must pass HMRC's business, turnover and compliance tests to get and keep it.
For CIS subcontractors, gross payment status is the difference between getting paid in full and having 20% (or 30%) held back. Here's how it works and whether it's worth chasing.
The three CIS payment rates
| Status | Deduction from labour |
|---|---|
| Registered subcontractor | 20% |
| Unregistered subcontractor | 30% |
| Gross payment status | 0% |
With gross status, the contractor pays you the full amount and you settle all your tax and National Insurance yourself through Self Assessment / MTD.
The upside: cash flow
Instead of HMRC holding 20% of your labour throughout the year, you keep it and pay your tax when it's due. For a busy subcontractor that's a significant cash flow improvement — money working in your business rather than sitting with HMRC until your refund.
The qualifying tests
To get gross status you must pass three tests:
- Business test — you carry out construction work (or supply labour) in the UK and run the business through a bank account.
- Turnover test — your construction turnover (excluding VAT and materials) meets HMRC's minimum threshold.
- Compliance test — your tax affairs are up to date: returns filed and payments made on time.
HMRC also reviews gross status periodically and can withdraw it if you slip on compliance.
The catch: discipline
Because nothing is deducted, nothing is set aside. You need the discipline to save for your tax bill — a common trap is spending money that's really the taxman's. A simple rule: move a percentage of every payment into a separate tax pot.
Gross status and MTD
With gross payment status there are no CIS deductions credited against your final bill. So your quarterly updates and final declaration determine the full tax due, with nothing paid in advance through deductions. That makes budgeting for the liability even more important — see our guide to how CIS refunds work for the contrast with deducted subcontractors.
Key takeaways
- Gross status = paid in full (0% deducted), tax settled through MTD/Self Assessment.
- Great for cash flow, but you must save for your own tax bill.
- Requires passing the business, turnover and compliance tests — and keeping compliant.
- Under MTD, no deductions are credited, so budgeting matters more.
This article is general information, not tax advice. Check the gross-status rules at gov.uk or speak to your accountant.
Frequently asked questions
What is gross payment status?
It's a CIS status that lets contractors pay you in full without deducting any CIS tax. You then account for all your tax and National Insurance through Self Assessment / MTD. It's the 0% option, versus 20% for registered and 30% for unregistered subcontractors.
How do I qualify for gross payment status?
You must pass three tests: the business test (you do construction work in the UK through a bank account), the turnover test (your construction turnover meets HMRC's minimum), and the compliance test (your tax affairs and returns are up to date). HMRC also reviews it periodically.
What's the downside?
You receive your money gross, so nothing is set aside for tax. You need the discipline to save for your bill. If you fall behind on tax compliance, HMRC can withdraw the status.
How does it affect MTD?
With gross status there are no CIS deductions credited against your bill, so your quarterly updates and final declaration determine the full tax due. Budgeting for that liability becomes even more important.
Related reading
How CIS Refunds Work for Subcontractors
Why so many CIS subcontractors are due a tax refund, how the 20% deduction interacts with your expenses and allowances, and how refunds are claimed and paid under MTD.
How to Check Your CIS Deductions Under MTD for Income Tax
A step-by-step guide to checking the CIS deductions HMRC holds against you as a subcontractor, reconciling them with your contractor statements, and getting them right before your final declaration.
MTD for CIS Subcontractors: What Subbies Need to Know for 2026
How Making Tax Digital for Income Tax affects CIS subcontractors (subbies). When you're in scope, what quarterly updates involve, and how your CIS deductions fit into your tax bill.