Construction law update · 2026

CIS changes from April 2026: what contractors and subcontractors must do now

The Construction Industry Scheme changed on 6 April 2026. Monthly nil returns are back, public bodies are outside CIS, and HMRC has tough new powers against supply chain fraud. Here is what it means for you.

  • Updated for the 2026/27 tax year
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At a glance

The four April 2026 CIS changes

Three tighten the rules; one makes life simpler for public sector work.

Nil returns reinstated

Registered contractors must file a monthly return even when no subcontractors were paid.

Public bodies exempt

Payments to local authorities and certain public bodies acting as subcontractors are now outside CIS.

“Knew or should have known”

HMRC can act where a business should have spotted fraud in its supply chain.

Five-year GPS bar

Lose gross payment status for fraud and you cannot reapply for five years.

What changed on 6 April 2026?

The Construction Industry Scheme (CIS) had its biggest shake-up in years at the start of the 2026/27 tax year. The changes were announced at the Autumn Budget on 26 November 2025 and came in through the Income Tax (Construction Industry Scheme) (Amendment) Regulations 2026 and the Finance Act 2026. Some are simplifications; others give HMRC far stronger powers. Here is each change in plain English.

1. Monthly nil returns are back

Since 2015, contractors did not need to file a CIS300 return in a month when they paid no subcontractors. That relief has now gone. If you are registered as a CIS contractor, you must file a monthly return by the 19th of the following month even when you made no payments, unless you have told HMRC in advance that you will be inactive for a period.

This catches many small builders out. A roofer who uses one subcontractor a few times a year is still a registered contractor, so a quiet month now needs a nil return. Late returns trigger automatic penalties, starting at £100 per return.

2. Local authorities and public bodies are outside CIS

Councils and some public bodies sometimes act as subcontractors, for example when a local authority carries out highway works for a developer. Until April 2026 they were treated as having gross payment status under an old concession. A new regulation now takes these payments out of CIS completely, so there is no deduction and nothing to report on your monthly return.

3. New powers to tackle CIS fraud

The biggest change is a new test borrowed from VAT. If HMRC can show that a business knew or should have known that a payment it made or received was connected to tax fraud, it can now:

  • remove the business’s gross payment status immediately, with no warning;
  • make the business pay the tax that was lost; and
  • charge a penalty of up to 30% of that tax, which can also be charged to directors and connected people.

A business that loses gross payment status this way must also wait five years before it can reapply, up from one year. We explain how to protect yourself in our guide to CIS fraud rules and gross payment status.

What has not changed

The deduction rates are the same: 20% for registered subcontractors, 30% for unregistered subcontractors and 0% for those with gross payment status. The gross payment status tests, including the VAT compliance check added in April 2024, are also unchanged. The VAT domestic reverse charge for construction services still applies alongside CIS.

Getting it right matters more than ever. If you are not sure whether you are a contractor, a subcontractor or both, talk to our team and we will tell you exactly what you need to file.

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Key dates

Monthly CIS deadlines for contractors

The tax month runs from the 6th to the 5th.

19th of each month

Monthly CIS return due, including nil returns from April 2026.

22nd of each month

CIS deductions paid to HMRC if you pay electronically (19th by post).

Statements by the 19th

Give each subcontractor a payment and deduction statement for the month.

31 January

Subcontractors claim their deductions back through Self Assessment.

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FAQs

Frequently asked questions

Do I have to file a CIS return every month now, even if I paid no one?
Yes. From 6 April 2026, a registered CIS contractor must file a monthly return by the 19th of the following month even when no subcontractors were paid, unless HMRC has been told in advance that you will not be making payments for a period.
Have the CIS deduction rates changed?
No. Deductions are still 20% for registered subcontractors, 30% for unregistered subcontractors and nothing for subcontractors with gross payment status.
I am a subcontractor. Do the April 2026 changes affect me?
Most of the new admin falls on contractors. But if you hold gross payment status, the new fraud rules mean you can lose it immediately and for five years if HMRC shows you knew or should have known a payment was linked to fraud. Expect contractors to carry out more checks before they pay you.
Do I still deduct CIS when a council works as my subcontractor?
No. From 6 April 2026, payments to local authorities and certain public bodies acting as subcontractors fall outside CIS altogether, so there is nothing to deduct or report.
What happens if I miss a monthly CIS return?
HMRC charges £100 as soon as the return is late, a further £200 at two months, and the greater of £300 or 5% of the CIS deductions at six months and again at twelve months. Penalties can be higher where a return is deliberately withheld.
Can you file my monthly CIS returns for me?
Yes. We verify subcontractors, file your monthly returns, issue payment and deduction statements and keep your records ready for HMRC checks, all for a fixed monthly fee.

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