If you work as a subcontractor in the construction industry, you’ve probably experienced the frustration of being paid late. Did you know that there is a way you can have more control of your cash flow, whilst enhancing your reputation in the industry? Say hello to Gross Payment Status (GPS).
Why apply for Gross Payment Status?
In essence, Gross Payment Status (GPS) ensures that contractors pay you in full, without immediate tax deductions. So if you’re desperate to escape the dreadful British weather, you’ll have the money to do so.
Having GPS also shows the rest of the industry that you are reputable, and that HMRC has the faith in you to pay your own tax on time. Looking good gets you looked at!
How do I apply for Gross Payment Status?
Firstly, you must be registered with the Construction Industry Scheme (CIS). If you aren’t, you can apply for GPS when you register for CIS.
You can apply online for GPS, or call the CIS helpline.
There are also a few tests that you need to pass:
- You need to have paid historic tax and National Insurance payments on time
- You must be doing construction work in the UK
- You must run your business through a bank account
Your turnover for the last 12 months, discounting VAT and cost of materials, must be at least:
- £30,000 if you’re a sole trader
- £30,000 for each partner or 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
Tax returns
Your payments must be declared as income at the end of the tax year in your Self-Assessment tax return.
Should I apply for GPS?
The suitability of Gross Payment Status depends on your situation. Opting into it gives you more industry credibility, and that you get more money upfront from contractors.
However, it’s important to bear in mind that GPS means more work for you. In addition to application criteria, you will be constantly reviewed by HMRC in order to keep your status. And don’t forget that you will have to complete your tax return at the end of the tax year. So having the money in your account by this time is essential.
Baa Accounting’s ethos: we can help you
As you know, completing your tax return can be a lengthy and tiresome process. That’s why the team at Baa Accounting are here to take any queries that you have about your tax return. We exist to take the pressure away with our tax rebate expertise and services. We can complete your return and submit all of the information to HMRC on your behalf, giving you more time to focus on your work.
For more information or to see how we can help, give us a call on 0208 570 1750 to chat with one of our tax experts. Alternatively, drop us a message on our contact page.
