Guides · Updated 2026-10-15
CIS changes from April 2026: what's new for trades
"New CIS rules 2026" turns up in Google's "People also ask" box for anyone searching about the Construction Industry Scheme. Several changes took effect from 6 April 2026. Some are admin tidy-ups, and one is a serious tightening aimed at fraud in labour supply chains. Here's what changed, from HMRC's own publications on GOV.UK, checked 15 October 2026.
Summary
| Change from 6 April 2026 | Who it affects |
|---|---|
| Contractors must file a nil return for months with no subcontractor payments, unless they told HMRC in advance | Contractors |
| Payments to local authorities and public bodies are taken out of CIS | Contractors paying those bodies |
| HMRC can remove gross payment status immediately where a business knew, or should have known, of deliberate non-compliance in its supply chain | Contractors and subcontractors |
| Tax determinations and penalties of up to 30% for those cases | Businesses and connected people |
| A five-year bar on reapplying for gross payment status after immediate removal for behaviour from 6 April 2026 | Subcontractors |
Nil returns
HMRC's tax information and impact note says contractors must now file a nil return when they haven't paid any subcontractors in a month, unless they've notified HMRC in advance that they won't make payments (GOV.UK). HMRC describes the impact as negligible for firms that already file nil returns, but a penalty is due if you do neither without a reasonable excuse.
Monthly returns are due by the 19th, and a return one day late costs £100, rising at 2, 6 and 12 months late (GOV.UK). If you're a small builder who only uses subcontractors now and then, put a monthly reminder in the same diary as your jobs. Our scheduling tools for builders page covers apps that can hold it.
Payments to public bodies
HMRC previously used an extra-statutory concession to treat certain public bodies as if they had gross payment status. From 6 April 2026 the law exempts payments to local authorities and public bodies from CIS directly. HMRC expects no change in practice for those bodies (GOV.UK).
Gross payment status and supply chain fraud
This is the change that matters most. Under new rules in the Finance Act 2004, if a business makes a payment for construction work, or claims a CIS credit, and it knew or should have known this was connected to deliberate non-compliance by another party, HMRC can (GOV.UK):
- remove gross payment status immediately
- make a determination for the tax lost (20% of the payment, or the amount of the credit claimed)
- charge a penalty of up to 30% of the tax lost, which can apply to the business and its directors or other connected people
Where gross payment status is removed immediately for behaviour on or after 6 April 2026, the business can't reapply for five years. For behaviour before that date, the wait is one year (HMRC manual CISR16110).
What a small firm should do
- Know who you're paying. Verify every subcontractor through HMRC before paying them, and keep the verification reference.
- Be wary of labour offered through unfamiliar chains. HMRC's supply chain guidance is aimed at situations where a business should have known something was wrong, such as rates that don't add up.
- Stay on time. Gross payment status already depended on paying tax and filing returns on time, with an annual review (GOV.UK).
- Keep CIS records in one place. Accounting apps such as Xero and QuickBooks list CIS features; check deductions with the free CIS calculator.
What hasn't changed
The deduction rates are still 20% for registered subcontractors, 30% for unregistered, and 0% with gross payment status, and the deduction is still worked out on labour after VAT and materials (GOV.UK). See how CIS is calculated and CIS explained for subcontractors.
From April 2026, many sole traders also report quarterly: see Making Tax Digital for Income Tax for the dates.
Get one useful AI tool in your inbox each weekday
Free, plain English, five minutes to read. Unsubscribe any time.
See our privacy notice.
FAQ
What are the new CIS rules for 2026?
From 6 April 2026: nil returns are required unless you've told HMRC in advance, payments to public bodies are exempt, and HMRC can remove gross payment status immediately, with a five-year bar and penalties of up to 30%, where a business knew or should have known about supply chain fraud.
Did the CIS rates change in 2026?
No. They're still 20%, 30% and 0% (checked 15 October 2026).
Do I need to file a CIS return if I paid no subcontractors?
Yes, a nil return, unless you've told HMRC in advance that you won't be paying subcontractors.
Is this tax advice?
No. It's a summary of HMRC publications checked on 15 October 2026. Ask an accountant or HMRC about your situation.