# CIS gross payment status: the three tests, the £30,000 turnover line and what it is worth

> Can you be paid with no CIS deduction? The business, turnover and compliance tests, the £30,000 and £100,000 figures worked through, and the annual review.

- Page to cite: https://aeolookup.com/trades/cis-gross-payment-status-tests-subcontractor-30000-turnover/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Trades and building firms, Rules and paperwork
- Published 5 October 2026
- Key fact: We ran the turnover test on a sole trader who invoiced £46,800 including VAT, which is £39,000 before VAT; with £11,500 of materials on it the figure is £27,500, which fails the £30,000 line by £2,500. On £30,000 of labour the 20% deduction holds back £6,000 a year, and a partnership of four with £25,000 each passes on the £100,000 whole-partnership test although no partner reaches £30,000.
- Sources: GOV.UK "What you must do as a CIS subcontractor", pages "Gross payment status" and "Annual review", and "What is the Construction Industry Scheme", all read 2026-10-05. The invoice and partnership figures in the examples are invented; the method is HMRC's.

Gross payment status means a contractor pays you the full amount of your labour with no CIS deduction taken off. It saves you waiting to reclaim the money later. It is not given on request, though. HMRC checks three tests, and then checks them again every year.

## What it is worth

A registered subcontractor has 20% taken from payments for labour, and an unregistered one has 30% taken. The contractor sends that money to HMRC on your behalf, and you get it back through your tax return or a repayment claim.

Take a sole trader whose labour comes to £30,000 in a year. At 20%, £6,000 is held back across the year. At 30%, it is £9,000. With gross status, it is nil. The tax you owe at the end is the same either way. What changes is how much of your own money sits with HMRC while you wait for it to come back, and that matters in a firm where the van, the materials and the wages are paid long before the return is filed.

Our [CIS deduction calculator](https://aeolookup.com/trades/cis-deduction-calculator/) shows the same invoice at 20%, 30% and gross side by side.

## The three tests

GOV.UK says you can apply for gross payment status by filling in an online or postal form, with a different form for sole traders, partnerships and limited companies. To qualify you must pass all three tests.

**1. Business test.** Your business does construction work, or provides labour for it, in the UK, and it is run through a bank account.

**2. Turnover test.** Excluding VAT and the cost of materials, your turnover must be at least:

- £30,000 if you are a sole trader
- £30,000 for each partner in a partnership, or £100,000 for the whole partnership
- £30,000 for each director of a company, or £100,000 for the whole company

GOV.UK adds that if a company has 5 or fewer controllers, the £30,000 applies to each of them.

**3. Compliance test.** You have paid your tax and National Insurance on time in the past. GOV.UK's page gives no tolerance in days and no count of late returns, so we cannot say how many late filings HMRC will overlook. The annual review page repeats the principle: "You must be on time with your tax returns and payments to keep your gross payment status."

## The turnover test worked through

The easiest way to fail is to count the wrong number. Invoices usually show VAT and materials, and neither counts.

| Step | Sole trader A |
|---|---|
| Invoiced in the last 12 months, including VAT | £46,800 |
| Take out VAT at 20% (divide by 1.2) | £39,000 |
| Take out materials on those invoices | £11,500 |
| Turnover for the test | £27,500 |
| Needed | £30,000 |
| Short by | £2,500 |

Sole trader A looks well over £30,000 on the bank statement and is still under. Our [VAT calculator](https://aeolookup.com/trades/vat-calculator-take-vat-out-of-total/) does the first step if you have only the VAT-inclusive total. GOV.UK describes the turnover as the figure "excluding VAT and material costs", and the page we read gives the 12 months before the application as the period.

The partnership and company tests have two routes, and you only need one of them.

| Business | Per-person figure | Whole-business figure | Result |
|---|---|---|---|
| Partnership of 3 at £32,000 each (£96,000) | £32,000 each: passes | £96,000: fails | Passes on the per-partner route |
| Partnership of 4 at £25,000 each (£100,000) | £25,000 each: fails | £100,000: passes | Passes on the whole-partnership route |
| Company with two directors and £85,000 | £42,500 each: passes | £85,000: fails | Passes on the per-director route |

The examples are invented, and the routes are as GOV.UK sets them out.

## Applying

Use the sole trader, partnership or limited company form that matches the business. Before you apply, line up the proof of the three tests: a bank account in the business's name, the last 12 months of invoices split into labour, materials and VAT, and the dates your returns and payments went in. If a return is outstanding, file it before you apply. A late return that is still open is the most obvious way to fail the compliance test.

If you take on subcontractors yourself, the other side of this is in our [CIS checklist for taking on a subcontractor](https://aeolookup.com/trades/cis-contractor-checklist-taking-on-a-subcontractor/). A contractor paying you gross still has to verify you with HMRC and file the monthly return, and a late return carries the penalties in our guide to the [CIS monthly return on the 19th](https://aeolookup.com/trades/cis-monthly-return-19th-late-penalties/).

## Keeping it: the annual review

GOV.UK says HMRC will review your business every year to decide whether you can keep your status. If you fail, the process on its annual review page is:

1. HMRC writes to you with the reasons.
2. You can write back with your reasons.
3. If HMRC does not accept them, it writes to say which conditions you have not met and when the withdrawal takes effect. The page gives that as 90 days from the letter.
4. If you think the decision is wrong, you have 30 days from the date of the letter to appeal.
5. After a cancellation you must wait a year from the date of the cancellation before you can reapply.

The practical point is that a gross status can be lost by something that has nothing to do with construction, such as a self assessment return filed late. The deadline for the next one is in our guide to the [31 January 2027 bill for CIS subcontractors](https://aeolookup.com/trades/self-assessment-31-january-2027-cis-subcontractor-tax-bill/).

## A short check before you apply

1. Is the business run through a bank account in its name?
2. Is the last 12 months' turnover, with VAT and materials taken out, at or above the line for your type of business?
3. Is every return filed and every payment made on time?
4. Do you have a reminder set for each filing date from now on, so that you keep the status once you have it?

If any answer is no, fix that first. A refused application leaves you where you are, but a cancelled one costs a year.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) sets up AI assistants for trades and building firms: they prepare drafts for a person to approve. They do not apply for the status or file your returns for you, and none of the steps above depends on them.

This is general information, not tax advice. If you are near a threshold, or a return is late, ask your accountant before you apply.

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General information for UK small firms, not legal, tax or financial advice.