CIS Gross Payment Status: 2024 and 2026 Changes

Two dates matter for Gross Payment Status under the Construction Industry Scheme. VAT compliance became part of the GPS compliance test on 6 April 2024. From 6 April 2026, HMRC gained power to cancel GPS immediately in fraud-linked cases and impose a five-year bar on reapplying where status is removed on that basis.

That is why many search results for CIS gross payment status 2026 changes are only half right. The regime did tighten again in 2026, but the first major change happened two years earlier when VAT returns and VAT payments were pulled into the test for gaining and keeping gross status. Treating everything as a 2026 change makes it harder to understand what HMRC is actually checking today.

GPS still matters because it changes cash flow in a material way. A subcontractor with gross status is paid in full and settles tax through its normal tax obligations later. A subcontractor without gross status is usually paid under the standard 20% CIS deduction instead. For businesses that rely on regular construction cash flow, losing GPS is not a paperwork problem alone.

The other point to keep clear at the start is process. The long-standing annual review still exists. HMRC can still review a GPS holder's tax compliance, warn that the review is about to fail, and withdraw status through the ordinary route if the business does not satisfy the conditions. The 2026 reform added a different path for fraud-linked cases, where HMRC can act immediately. The rest of the article works through that split: what changed in 2024, what changed in 2026, and where the older one-year reapplication rule still applies.

What has not changed in the business and turnover tests

The easiest way to understand the recent reforms is to separate the structure of GPS from the compliance rules inside it. The structure is still the same. HMRC still looks at three qualifying tests: the business test, the turnover test, and the compliance test. The recent reforms changed the compliance side. They did not replace the underlying framework.

The business test remains straightforward. The subcontractor must be carrying on construction work, or providing labour for construction work, in the UK, and the business must be run through a bank account. That has not been rewritten by the 2024 or 2026 reforms.

The turnover test is also unchanged. HMRC looks at net construction turnover over the previous 12 months, excluding VAT and the direct cost of materials. The thresholds are still:

• Sole trader: at least GBP 30,000
• Partnership: at least GBP 30,000 for each partner, or at least GBP 100,000 for the whole partnership
• Company: at least GBP 30,000 for each director, or at least GBP 100,000 for the whole company

There is one detail worth stating explicitly because summary articles often skip it: if a company is controlled by five people or fewer, HMRC expects annual turnover of GBP 30,000 for each of those people. That point did not arrive with the new reforms either. It is part of the pre-existing turnover framework.

So when a reader asks whether the GPS rules changed, the accurate answer is more precise than "yes". The entry thresholds did not move. The business test did not move. What moved was the compliance test, first by pulling VAT obligations into scope from 6 April 2024, and then by adding a tougher immediate-cancellation regime for certain fraud-linked cases from 6 April 2026. For the wider background on the scheme itself, including how deduction status works outside GPS, see UK CIS invoice requirements and deduction basics.

How the compliance test changed on 6 April 2024

The 6 April 2024 reform is the one that changed everyday GPS maintenance. Before that date, VAT compliance did not sit inside the statutory test for gaining and keeping gross status. From 6 April 2024, it does. For existing GPS holders, HMRC only counts VAT compliance failures from that date onward, which matters because some businesses still assume older VAT issues can be pulled into a current review. HMRC's published position is narrower than that.

In practical terms, the compliance test now spans the main obligations a construction business may owe over the previous 12 months: CIS where relevant, Self Assessment, Corporation Tax, PAYE, and VAT. That means the annual review is no longer just a question of whether payroll and direct-tax filing are tidy. VAT filing and VAT payment discipline now sit inside the same retention test.

That does not mean every small VAT slip automatically destroys GPS. HMRC built tolerances into the 2024 change. The main VAT tolerances are:

• up to three late VAT returns, provided each is no more than 28 days late
• any late VAT payment under GBP 100
• up to three late VAT payments of GBP 100 or more, provided each is no more than 14 days late

Those tolerances matter because they stop the rule from becoming absurdly brittle. A business should not read the 2024 reform as "one day late once and GPS is gone". Equally, it should not read the tolerances as permission to drift. Repeated lateness, a return still outstanding at review time, or a payment that falls outside the tolerance window can still cause a failure. HMRC sets those thresholds out in its compliance tolerance guidance, and it also preserves the usual reasonable-excuse route, so the right question is not simply whether something was late, but whether it falls within tolerance or is supported by an accepted explanation.

The timing point is just as important as the thresholds. HMRC reviews the previous 12 months, so an avoidable VAT failure earlier in that period can still be sitting inside the review window long after the business feels it has "moved on". GPS retention therefore becomes a rolling discipline, not a once-a-year check.

That is why VAT record quality matters more than it did before. Good filing starts with reliable invoice capture, clean purchase and sales evidence, and a process that lets the business prove what was filed and when. If that underlying paperwork is weak, GPS risk rises with it. The same discipline behind compliant VAT returns sits behind UK VAT invoice requirements, because HMRC can only overlook minor failures, not a business that cannot keep its records straight.

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What 6 April 2026 changed about immediate cancellation

The 6 April 2026 reform sits in a different category from the 2024 VAT change. It is an anti-fraud measure, not a rewrite of the ordinary annual review. The key point is that HMRC now has a stronger immediate-cancellation route where it believes a business is involved in fraud-linked payments, instead of relying only on the slower review-and-withdrawal path used for routine compliance failures.

The cleanest official summary comes from HMRC's policy paper on CIS fraud changes: from 6 April 2026, HMRC can immediately remove Gross Payment Status where a business knew or should have known a payment was connected to fraud, and those removed in these cases cannot reapply for 5 years. That is the 2026 headline readers actually need.

Two distinctions keep this section accurate. First, this is not the date when VAT first entered the compliance test. That happened on 6 April 2024. Second, this is not the same thing as an ordinary annual-review failure. A business can still lose GPS through the standard review process if its filing and payment record does not satisfy the conditions. The 2026 measure is about immediate action in a narrower class of cases tied to fraud and serious non-compliance.

That is why the five-year bar needs to be stated carefully. It does not replace the long-standing one-year reapplication rule across the board. It attaches to businesses whose GPS is removed immediately under the tougher fraud-focused regime. If a reader misses that distinction, they end up with the wrong answer to the most common practical question, which is whether every GPS loss now triggers a five-year wait. It does not.

For subcontractors, the practical implication is less about legal theory and more about exposure. HMRC is signalling that GPS is no longer judged only by whether returns eventually get filed and liabilities eventually get paid. The department is also looking at whether a business is participating in, or turning a blind eye to, fraud-linked transactions. That makes due diligence, record retention, and the ability to explain payments and counterparties more important than they were under a simpler annual-review model.

What happens if HMRC removes your gross payment status

For most businesses, the ordinary risk path is still the annual review. GOV.UK's annual review guidance for CIS subcontractors says HMRC reviews GPS holders each year to decide whether they can keep their status. If the business does not meet the conditions, HMRC writes first to explain that the review is about to fail and why. The subcontractor then has the chance to respond with its explanation.

If HMRC accepts that explanation, GPS stays in place. If it does not, HMRC writes again to say what conditions have not been met and that gross payment status will be withdrawn in 90 days. That timetable matters because it shows the normal review route is still a notice-and-response process. It is not the same thing as the 2026 fraud-linked immediate-cancellation power.

The appeal position is also more structured than many summary articles suggest. If HMRC makes that withdrawal decision after review, the business has 30 days from the date of the withdrawal letter to appeal. In practice, that means the best responses are specific: identify which filing or payment HMRC says failed, whether it falls inside an official tolerance, and whether there was a documented reasonable excuse or a factual error in HMRC's view of the record.

The reapplication rule depends on how status was lost. If GPS is cancelled through the ordinary annual-review route, GOV.UK still says the business must wait one year from the date of cancellation before reapplying. That remains the default rule. The five-year bar is the newer, separate rule for businesses whose GPS is removed immediately in the fraud-linked cases introduced from 6 April 2026.

The commercial consequence is straightforward even when the paperwork is not. Once GPS is no longer in force, contractors stop paying gross and return to paying under CIS deduction instead. For a subcontractor that has priced jobs and cash flow around gross payment, that shift can be painful. For limited companies, it also raises the practical question of how CIS suffered is offset through the EPS once deductions start biting again. That is why the appeal and explanation stages matter, but they need to be approached with evidence rather than broad statements that the business is usually compliant.

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A practical checklist for keeping GPS under the new rules

The businesses that keep GPS tend to treat it as a routine, not as a status they revisit once a year. Under the current rules, that routine should cover:

• VAT returns filed on time. The 2024 reform means VAT is now part of the GPS compliance picture, so filing dates matter as much as payment dates.
• VAT paid on time. Even where HMRC can overlook a small number of minor failures, repeated lateness is still a risk signal.
• PAYE, Self Assessment, and Corporation Tax kept current. GPS is a cross-tax compliance test, not a VAT-only test.
• CIS obligations handled where relevant. If the business also acts as a contractor, nil returns are back from 6 April 2026 unless HMRC has been told in advance that there will be no subcontractor payments for that month, and a clear CIS300 return workflow from subcontractor invoices helps keep materials splits and corrections under control.
• Records ready to defend the filing history. Clean purchase invoices, sales invoices, payment records, and reconciliation notes make it easier to explain what happened if HMRC reviews the business.
• GPS treated as a monthly control, not an annual scramble. The safest time to find a problem is before the review window captures it, not after the HMRC letter arrives.

This is also where process design starts to matter. Reliable invoice record-keeping workflows reduce the odds that a late VAT return or a missing support document turns into a GPS problem later. The point is not software for its own sake. It is that the compliance test now reaches into the quality and timeliness of the records behind the return.

For sole traders and partnerships, it also helps to line GPS controls up with the wider compliance calendar. A business that is already preparing for Making Tax Digital for Income Tax from April 2026 should treat GPS retention as part of the same discipline: deadlines tracked, records current, and evidence easy to retrieve. The same record discipline also makes it easier to handle CIS deductions on a Self Assessment return when gross status is lost or deductions continue during the year.