If you hold gross payment status, contractors will pay you in full, without deductions. This can offer significant cashflow advantages as you’ll often end up paying your Tax and National Insurance many months after the profits are made, rather than at the time.
To qualify for gross payment status you must show HM Revenue and Customs (HMRC) that your business passes some tests. You 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; and
- Your business is run through a bank account.
HMRC will look at the 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; or
- £30,000 for each director of a company, or at least £100,000 for the whole company; and
- If your company is controlled by 5 people or fewer, you must have an annual turnover of £30,000 for each of them.
If you pass the above tests then you can apply for gross payment status, this can improve cash flow greatly, and make it easier to manage a growing business.
If you’re already registered for CIS, you can apply for gross payment status by calling the CIS helpline, 0300 200 3210 or applying online. Contact us today for any assistance needed.