Short answer: To get CIS Gross Payment Status (GPS) in 2025/26 you must pass three HMRC tests turnover, business, and compliance—and then stay clean at HMRC’s annual review. From 6 April 2024, VAT returns and VAT payments are part of the compliance test for granting and keeping GPS. GOV.UK
Quick definition (so we don’t assume you know it): GPS means contractors pay you in full with no CIS deduction (you settle the tax later via Self Assessment or Corporation Tax). It’s optional under the Construction Industry Scheme (CIS) and must be applied for. GOV.UK
Who this is for
UK subcontractors (including developer SPVs acting as subcontractors) who want to be paid in full (no CIS deductions) and keep that status at review time.
If you’re brand new to CIS, start with our explainer for developers (internal): CIS explained for developers.
The 3 tests you must pass (2025/26)
1) Turnover test: prove enough net construction turnover
HMRC looks at the last 12 months of net construction turnover (exclude VAT and the cost of materials) and checks you hit the thresholds below:
- Sole trader: £30,000
- Partnership: £30,000 per partner or £100,000 total
- Company: £30,000 per director or £100,000 total
- If the company is controlled by five people or fewer (close company), HMRC looks at “relevant persons” (directors and, if close, beneficial shareholders). GOV.UK
Get your numbers right by splitting invoices correctly. See: how to split labour vs materials.
Prospective Receipts route (fast-track for new/growing businesses). A company or partnership can pass the turnover test by showing (a) £30,000 earned on its own account and (b) signed construction contracts whose total value exceeds £100,000 at the application date. Not open to sole traders. GOV.UK
If you’re a newco with signed deals, read our Prospective Receipts guide.
2) Business test: show you’re genuinely in UK construction
You must carry out construction operations in the UK (or supply labour) and run the business through a bank/building society account. GOV.UK
Not sure if you count as a contractor as well as a subcontractor (many developers do)? See CIS for property developers.
Strengthen your controls: verify subcontractors before you pay them.
3) Compliance test: on-time returns & payments (now includes VAT)
HMRC checks the last 12 months across CIS300, PAYE/NIC, Self Assessment/CT, and VAT (from 6 Apr 2024 for both granting and keeping GPS). Failures within HMRC’s tolerance can be overlooked; outside tolerance, GPS is refused/withdrawn. GOV.UK
If you work under Domestic Reverse Charge (DRC) VAT, keep filings/payments tidy so DRC doesn’t cause late VAT. (VAT timeliness now counts.) GOV.UK
Need a refresher? See Reverse Charge VAT in construction.
Exactly how much lateness HMRC will (and won’t) tolerate
HMRC’s compliance tolerance (applies to the 12-month “qualifying period”):
HMRC can overlook
- Up to 3 late CIS300 returns <28 days late
- Up to 3 late VAT returns <28 days late
- Up to 3 late payments of CIS/PAYE/VAT ≥£100, if each is <14 days late (per tax individually)
- Any late CIS/PAYE/VAT payment where the amount is <£100
- SA or CT return filed ≤28 days late
HMRC will not overlook
- 4+ late CIS300 or 4+ late VAT returns (even if each <28 days)
- Any CIS/VAT/SA/CT return >28 days late
- 4+ late payments ≥£100 (even if each <14 days)
- Any payment ≥£100 >14 days late
- Any late NIC payment
- Any return or payment due but still outstanding at application/review.
For businesses that already held GPS on 6 Apr 2024, VAT failures before that date are ignored in the compliance test. HMRC also applies a de minimis so obligations of £99.99 or less count as met. GOV.UK
Want the line-by-line breakdown and examples? See CIS penalties & tolerance explained.
How to apply (pick the right route)
Apply online or by post—form depends on your structure:
- Sole trader: CIS302 (register/apply for GPS). GOV.UK
- Partnership: CIS304 (register/apply for GPS). GOV.UK
- Limited company: CIS305 (register/apply for GPS). GOV.UK
What HMRC may ask to see: evidence of turnover (invoices, bank statements, contracts), director/PSC details, and (for new/growing firms) prospective turnover/contracts. GOV.UK
For the step-by-step, read CIS registration: contractor vs subcontractor (CIS302/304/305).
Keeping GPS: what HMRC’s annual review actually checks
HMRC runs the Tax Treatment Qualification Test (TTQT): an automated check over the last 12 months. If you’re drifting offside, HMRC writes to warn you; if unresolved, they’ll issue a letter withdrawing GPS in 90 days and you have 30 days to appeal. If cancelled, you must wait 12 months from cancellation to re-apply. GOV.UK
Stay review-ready with clean monthly ops:
• File CIS300 on time and issue Payment & Deduction Statements
• Keep PAYE/NIC & pensions on time
• Use our CIS compliance calendar
Worked scenarios
A) New limited company with big contracts
- Has £30k earned on its own account and signed contracts totalling £150k at application.
- Outcome: Can use the Prospective Receipts test to pass turnover now (supply evidence of the £30k and signed contracts). GOV.UK
B) Established subbie with timing issues
- Three VAT payments of £100+ paid 10 days late and one CT600 filed 35 days late in the last 12 months.
- Outcome: Fails compliance (CT return >28 days late is fatal). Fix outstanding items then run 12 months clean before reapplying. GOV.UK
Your step-by-step checklist (copy/paste for your ops channel)
- Turnover — compute net construction turnover (exclude VAT & materials) and confirm your threshold (and relevant persons if close company). GOV.UK
- Business evidence — UK construction (or labour supply) + business bank account. GOV.UK
- Compliance sweep (12 months) — CIS300, VAT (from 6 Apr 2024), PAYE/NIC, SA/CT — check you’re inside HMRC’s tolerance. GOV.UK
- Apply with the right form — CIS302 / CIS304 / CIS305 (online or post). GOV.UK
- Diary the review — quarterly self-checks and a pre-review tidy 6–8 weeks before your anniversary (use the compliance calendar internal).
FAQs (They Ask, You Answer)
What exactly counts as “net construction turnover”?
Your gross construction income excluding VAT and excluding the cost of materials. HMRC’s CIS305 notes illustrate the calculation and the £30k per relevant person / £100k alternative thresholds. GOV.UK Assets
We’re a close company who counts as a “relevant person”?
Directors and, if the company is close, beneficial shareholders. HMRC multiplies the £30k threshold by the highest number of relevant persons in the 12-month test period. GOV.UK Assets
Does reverse charge VAT change the test?
Not the mechanics, but VAT timeliness now matters in the compliance test (from 6 Apr 2024). Late VAT filings or payments can jeopardise GPS. GOV.UK
How much lateness is “allowed”?
Broadly: up to 3 late CIS300 or VAT returns (<28 days) and up to 3 late payments ≥£100 (<14 days) (per tax). Anything >28 days late, 4+ late events, or late NIC will fail the test. GOV.UK
If HMRC removes my GPS, how long before I can re-apply?
12 months from the cancellation date. You’ll also get 90 days’ notice and have 30 days to appeal. GOV.UK
Apply now (official routes)
- Sole traders — apply with CIS302 (online or post). GOV.UK
- Partnerships — apply with CIS304 (online or post). GOV.UK
- Companies — apply with CIS305 (online or post). GOV.UK
Prefer a walkthrough first? Read our CIS registration: contractor vs subcontractor (CIS302/304/305).
Why this matters more in 2025/26
From 6 April 2024 HMRC strengthened GPS: VAT compliance is now part of the test for granting and keeping GPS, and HMRC has wider powers to cancel GPS quickly where there’s suspected VAT/CT/IT/PAYE fraud. If you’re often in VAT repayment (e.g., under DRC) and have been casual about deadlines, tighten up now. GOV.UK
CTA: Book a 20-minute CIS GPS Readiness Check
What you get: a fast pass/fail view against HMRC’s tolerance, your net construction turnover validated (with the right labour vs materials split), and a keep-GPS checklist ahead of review.
Book now