Under the Construction Industry Scheme there are essentially 3 payment statuses. A payment status dictates how a subcontractor is paid;
- Income taxed 20% at source by contractor
- Income taxed 30% at source by contractor
- Gross Payment Status
CIS Gross payment status allows a business to receive its payments in full without any tax deduction at source by the contractor. This is naturally, the preferred method for many within the CIS scheme.
Having gross payment status has the advantage of ensuring a better level of cashflow is maintained. Also, some contractors deduct a margin for processing a CIS payment and this is another cost that can be saved by having gross payment status.
The criteria for getting gross payment status can be found here.
If you’d like to discuss the above and applying for gross payment status, please get in touch.
