CIS Gross Payment Status — is it worth applying for?

Gross Payment Status (GPS) is a CIS classification HMRC grants to subcontractors who meet specific criteria. With it, contractors pay you the full invoice amount — no 20% or 30% deduction taken at source. You then handle the entire tax bill yourself through Self Assessment.

On the surface it sounds like a no-brainer: keep more money up front. But there's a real trade-off, and it isn't for everyone.

HMRC will only grant GPS if you pass all three of these tests:

You apply through your HMRC online account (the Government Gateway). The application asks for your business details, turnover figures, and bank details. HMRC reviews — typically takes 2–4 weeks. They either grant GPS, ask for evidence, or decline with reasons.

If granted, your contractors get notified the next time they verify you, and from then on they pay you gross.

With standard CIS, the 20% deduction is effectively forced saving. Each month, money you'd otherwise spend is being banked with HMRC against your tax bill. You arrive at year-end and your tax bill is often already covered, or you're due a refund.

With GPS, none of that happens. You receive the full amount on every invoice, and you're responsible for setting aside enough to cover the tax bill. If you don't — and many sole traders don't the first year — January arrives and you're facing a £6,000-£15,000 tax bill with the money already spent.

The rule of thumb: only apply for GPS if you're confident you can ringfence at least 25% of every payment into a separate tax-savings account immediately. If that discipline isn't in place, standard CIS protects you from yourself.

GPS makes sense when:

• You're routinely paying tax bills below 20% of your labour turnover — meaning the deductions over-collect and you wait months for a refund.
• You have significant capital outgoings (van replacement, plant, tools) and the deductions are choking your cash flow at exactly the wrong time.
• You operate as a limited company and the GPS rules suit your accounting structure better.
• You're already disciplined about tax savings — separate account, monthly transfers, the works.

For most sole traders with modest expenses, standard registered CIS at 20% is the simpler option.

HMRC reviews GPS holders periodically. If you miss a filing, pay tax late, or your circumstances change (turnover drops below £30,000), they can revoke it. They give you 90 days to put it right or appeal — but during that window your contractors revert to deducting at 20% or 30%, so the cash-flow rug pulls fast.

Once revoked, you can't reapply for 12 months.

Whether you're on standard CIS or GPS, Honest Invoices tracks every invoice, splits labour and materials correctly, and (for GPS holders) maintains a running “tax to set aside” figure so January isn't a surprise. Estimate your CIS deduction on any specific job with our free CIS deduction calculator.