CIS gross payment status allows your company to be paid gross rather than being taxed at source. In the construction industry, income is normally taxed 20% at source (CIS) or 30% (non-CIS).
Having gross payment status lets your company receive its gross turnover without any deductions at source. You will be responsible for paying Corporation Tax, income tax and NI as required.
Gross status is a level within CIS registration and is the preferred method for many construction workers. We’ll take you through the process of getting gross payment status for your CIS registered limited company.
How do I qualify for CIS gross payment status?
You must show HM Revenue and Customs (HMRC) that your business passes some tests. You’ll need to show that:
- you’ve paid your tax and National Insurance on time in the past
- your business does construction work (or provides labour for it) in the UK
- your business is run through a bank account
HMRC will look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least:
- £30,000 if you’re a sole trader
- £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
- £30,000 for each director of a company, or at least £100,000 for the whole company
If your company’s controlled by 5 people or fewer, you must have an annual turnover of £30,000 for each of them. More information is available on the government’s website.
A CIS accountant can help you apply for gross status once your company has been trading for 12 months and has satisfied the other criteria.
How can I apply for gross payment status?
To register for CIS, you will need the following:
- Your National Insurance Number
- Your legal business name – you can also give your businesses trading name if it is different to your business name
- The unique taxpayer reference number (UTR) for your business
- Your VAT registration number (if your business is VAT registered)
If you are a contractor (you pay subcontractors to do construction work) and a subcontractor, you will need to register for CIS as both.
HMRC has a dedicated CIS helpline for help with registering or if you want to speak to a representative about becoming CIS registered. You can also sign up for webinars and emails to watch useful videos about CIS on the government’s website.
If you’re a Fusion Business Services client, let us know that you would like to apply for gross payment status. We can help you complete the paperwork required by HMRC, and advise you where this should be sent.
Our support will ensure you avoid delays and inaccuracies when applying for gross status.
What happens next?
If accepted for gross payment status, you’ll declare gross payments as company turnover in your Corporation Tax Returns. You’ll then pay Corporation Tax on the taxable profit as required. It’s important to note that gross payments are VAT inclusive if your company is VAT registered. However, output VAT does not contribute to the overall sum of your company’s turnover. As part of our CIS accountancy service, we can make these calculations so HMRC receives accurate numbers.
HMRC might conduct an annual review to decide if you still qualify for gross payment status; it will factor in whether you are on time with tax returns and payments. You are allowed a small amount of late payments or returns, but if you fail your review and HMRC cancels your gross payment status, you need to wait a year from the cancellation date to reapply.
More information about gross payment status is available on the government’s website.
Fusion Business Services has a dedicated CIS service
Registering under the CIS and applying for gross payment status may seem overwhelming, but we can help. At Fusion Business Services, we specialise in accountancy for limited companies, including construction workers (CIS). We’ll guide you through the entire CIS process and give you long-term support with our accountancy service. You’ll have the security and confidence to control your finances and plan your future in the most tax-efficient way.
If you would like more information about our CIS service and applying for gross status, please call us now on 0800 2994020 or schedule a free consultation.
