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As a subcontractor you would normally have tax deducted at source from your income by the contractor paying you. The amount of tax that is deducted can vary from 20% - 30%. 

The standard rate of deduction is 20% but if for any reason the contractor can’t verify you as you may not be registered for CIS correctly or you may have given an incorrect business name the contractor will deduct tax at 30%.

To not have any deductions of tax you would need to apply for Gross Payment Status. Any tax and National Insurance that is owed by you as the subcontractor will then be calculated on your self-assessment tax return and paid at the relevant date rather than being deducted at source.

It is possible to apply for Gross Payment Status at the point of registration for the Construction Industry Scheme or you can apply at a later date. If you do this at a later date you will either need to call the CIS helpline on 0300 200 3210 or you can complete a form online here.

The criteria set out below needs to be fulfilled to qualify for Gross Payment Status: 

  • All tax and NIC must have been paid on time in the past
  • You have to operate in the construction industry in the UK
  • You have to have a bank account set up
  • Your turnover must be at least £30,000 if you are a sole trader, £30,000 for each partner if you are operating as a partnership or £100,000 for the whole partnership, or £20,000 for each director if you are operating as a company or £100,000 for the whole company (for companies controlled by five or fewer the annual turnover for each person must be £30,000).

If you would like any advice or assistance in this area please contact us on 0800 0523 555 or use our simple online contact form to arrange a free initial consultation.

Date published 17 Dec 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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