Related answers
£30,000 for a sole trader, measured on relevant payments in the twelve months before the application and excluding both VAT and the cost of materials. A partnership needs £30,000 multiplied by the number of partners, or £100,000 in total, whichever it can satisfy. A company needs £30,000 multiplied by the number of relevant persons — its directors, and in a close company its beneficial shareholders — or £100,000 in total. The multiple test uses the maximum number of relevant persons at any one time in the twelve months. Because materials and VAT come out, the figure being tested is your labour turnover, which is why the bar is much lower than most trades expect.
The turnover test looks at your construction turnover excluding VAT and excluding the cost of materials. That is the number that has to clear the threshold, not your headline sales figure. A materials-heavy business can invoice a great deal and still fail, and a labour-only business can pass on a much smaller headline.
It also means the test is easiest to pass for exactly the businesses that benefit most from passing it: a labour-only subcontractor has a deduction base close to its whole invoice, so removing the deduction is worth more to it than to anyone else.
There are three: the business test, the turnover test and the compliance test. The compliance test is what actually refuses applications. It looks at whether your obligations have been met on time — CIS returns, PAYE, Self Assessment, corporation tax, and since 6 April 2024, VAT.
A business that clears the turnover threshold comfortably and has a late VAT return in the last twelve months is in more difficulty than one that only just clears it with a clean record. Our checker tests the turnover limb only, and says so, because the compliance limb cannot be evaluated from typed figures.
The status is reviewed. Compliance is tested continuously rather than once at application, and from April 2026 losing it costs more than it used to. The sensible sequence is to get the wider compliance record clean first and apply second.
This question is part of Gross payment status, which covers the whole area.
Send us three months of payment and deduction statements. We will tell you what is wrong, what it is costing, and whether gross payment status would fix it.