The construction industry is governed by a regulated tax framework designed to maintain compliance across the sector. HMRC introduced the Construction Industry Scheme (CIS) to reduce tax avoidance and improve compliance across the industry. Under CIS, contractors must deduct tax at the source before paying subcontractors. While this protects HMRC’s revenue, the deductions often mean subcontractors are paying tax upfront.  Although many can reclaim some of this tax later through their self-assessment return, the immediate reduction in income can create significant cash-flow pressure, especially for smaller businesses or sole traders who rely on the full value of their invoices to cover labour, materials, and daily operating costs. The Gross Payment Status (GPS) is an attractive option for subcontractors who meet HMRC’s eligibility requirements. With Gross Payment Status, subcontractors receive the full value of every invoice without any CIS deductions, allowing them to pay their tax at a later date through Self Assessment or Corporation Tax. This arrangement can significantly improve cash flow, strengthen financial stability, and free up capital for business growth. At The Infinity Group, we regularly support both contractors and subcontractors with all aspects of CIS, including registration, GPS applications, and compliance checks. This guide explains how CIS normally works, what GPS means, who is eligible, how to apply, the advantages of obtaining GPS, and the responsibilities that come with it. How Payments Normally Work Under CIS Under the Construction Industry Scheme, a portion of a subcontractor’s payment should be deducted by the contractor before releasing funds. This amount is transferred directly to HMRC and treated as an advance towards the subcontractor’s annual tax and National Insurance liabilities. The remaining amount is then paid to the subcontractor. What Gross Payment Status (GPS) Means Gross Payment Status allows subcontractors to be paid the full value of their invoices, with no CIS deductions taken at the source. Instead of contractors withholding 20% or 30% tax, the subcontractor receives the entire payment and later pays the correct tax through their self-assessment or corporation tax return. For many businesses, this represents a significant change. Receiving full payments improves cash flow, strengthens relationships with suppliers, and frees up capital for investment and growth. GPS also signals trust: HMRC only grants it to businesses that have demonstrated strong financial management and consistent compliance with tax obligations. However, this benefit comes with responsibility. Subcontractors must maintain strict tax compliance and stay fully up to date with filings and payments. Any failure to comply can result in HMRC removing the GPS and reverting the business back to Net status. Difference Between Net Payment Status and Gross Payment Status The key difference between the two systems is who is responsible for paying the tax to HMRC. For subcontractors, this is a significant shift. Net status reduce immediate cash flow, whereas GPS provides greater control over money and improves liquidity. For contractors, the difference is minimal; they simply pay the subcontractor’s invoice in full rather than after deductions. How Payments Work Under Gross Payment Status Once a subcontractor has been granted Gross Payment Status, the payment process becomes straightforward. They issue invoices as normal, and contractors pay the full amount without making any CIS deductions It is important to note that GPS does not reduce the amount of tax owed. The tax liability remains the same. The only change is when the tax is paid and who is responsible for paying it. Eligibility: Who Can Apply for GPS Not every subcontractor will qualify for Gross Payment Status. HMRC applies three strict tests to decide whether a business is eligible: Business Test The subcontractor must be carrying out work that falls within the scope of the Construction Industry Scheme. This includes activities such as building, plumbing, electrical work, roofing, decorating, demolition, and other construction-related operations.Businesses outside these categories cannot qualify for GPS. Turnover Test The business must meet HMRC’s minimum construction turnover requirements. Turnover must: The thresholds differ depending on the business structure: Sole TradersMust have at least £30,000 in construction turnover. Partnerships£30,000 for each partneror at least £100,000 total across the whole partnership. Limited CompaniesHMRC applies one of two:• £30,000 for each director who is actively involved in construction workor• at least £100,000 total construction turnover for the company. New BusinessesNew subcontractors do not need to meet the turnover test for their first 12 months.However, they must still pass the Business and Compliance Tests. Compliance Test HMRC will assess the business’s tax history to confirm it has a strong record of compliance. This includes: Late submissions or late payments will almost always result in the application being refused. Who Can Apply Both sole traders and limited companies can apply for Gross Payment Status if they meet HMRC’s requirements. New businesses are also eligible; although they are exempt from the turnover test during their first 12 months, they must still demonstrate reliability and full compliance from the outset. How to Apply Applying for Gross Payment Status is a simple process, but HMRC will only approve businesses that can clearly demonstrate they meet the required standards. The steps are as follows: If Your Application Is Refused HMRC will explain the reason for refusal. You can appeal the decision or reapply later once any issues such as late submissions or unpaid tax have been resolved. Annual Reviews HMRC will carry out yearly reviews to ensure your business continues to meet the GPS criteria. Failure to maintain compliance may result in GPS being withdrawn. Advantages of Gross Payment Status Gross Payment Status offers several valuable benefits for subcontractors, beyond simply avoiding CIS deductions at the source: At The Infinity Group, many of our clients have benefited from GPS through improved cash flow, stronger supply chains, and increased capacity to grow their businesses. Responsibilities and Risks Gross Payment Status offers significant advantages, but it also comes with important responsibilities. A business must maintain high standards of compliance at all times. Responsibilities Risks GPS provides freedom, but it requires discipline. Subcontractors should have strong bookkeeping and cash management systems in place before applying.