Anyone new to Construction Industry Scheme (CIS) may be wondering how to get gross payment status (GPS). Find out how to apply for gross payment status online and pay tax after getting GPS.
Most CIS contractors and subcontractors see gross payment status as being beneficial to their business.
It means you can take better control of your own cash flow during each tax period.
You may find that it also improves your reputation for working with large scale contractor operations.
The best time to apply for gross payment status is at the same time you register for CIS. Contractors would then be paying you in full and without deductions.
Tax and National Insurance would become an annual payment made at the end of the tax year once you get gross payment status.
The process differs if you already registered for the Construction Industry Scheme (CIS). You can still apply online or you may need to contact the CIS helpline to apply for gross payment status.
There are several tests for a business to pass before HM Revenue and Customs (HMRC) will grant gross payment status. HMRC will need to see that:
HM Revenue and Customs will also view the business turnover for the previous 12 months. They will ignore the VAT portions and cost of building materials. But, after those deductions, business turnover must be at least:
Note: A company controlled by five (5) people or fewer must have an annual turnover of £30,000 for each of them.
You will need to declare payments as income at the end of the tax year. Thus, depending on the legal status of your business, you will either pay through:
Pay Tax and Claim Deductions | Responsibilities for paying tax and National Insurance for the business.
CIS Annual Review | HMRC review businesses each year to decide whether they can keep their status.
CIS Subcontractor Gross Payment Status in United Kingdom