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?
For your limited company to qualify for gross status, you must satisfy these conditions:
- You have paid your tax (including company tax) and National Insurance obligations on time in the past
- Your company’s net construction turnover must have been £30,000 or more in the last 12 months. This excludes VAT and the cost of materials
- You must be operating your business in the UK through a bank account
A CIS accountant can help you apply for gross status via CIS305 once your company has been trading for 12 months and has satisfied the other criteria.
How can I apply for gross payment status?
If you are confident that you meet the requirements, applying can be done online using the form CIS305. You will need to provide information about your company that will prove its eligibility for CIS gross payment status. HMRC will carry out company checks based on the information provided, so it’s important to get it correct.
If you’re a Churchill Knight 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 website.
Registering under the CIS and applying for gross payment status may seem overwhelming, but we can help. Churchill Knight has been helping contractors with limited companies since 1998, including construction workers.
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, contact us or request a callback.
Updated 28th February 2019.