From 6 April 2026, the Construction Industry Scheme (CIS) is changing. These CIS changes April 2026 affect contractors, subcontractors, and anyone working in the UK construction sector. Some changes strengthen HMRC’s enforcement powers. Others simplify the administration. All of them require your attention now.
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What is CIS and who does it affect?
CIS stands for the Construction Industry Scheme. It governs how contractors pay subcontractors in the UK construction industry. Contractors deduct money from subcontractor payments and send it to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
If you work in construction — as a contractor or subcontractor — CIS applies to you.
What is HMRC changing from April 2026?
Four key areas are changing. We explain each one below.
Does HMRC have new powers to tackle CIS fraud?
Yes. HMRC is significantly strengthening its enforcement powers from 6 April 2026.
The new rules allow HMRC to act where a business “knew or should have known” it was involved in a transaction connected to CIS fraud. This is an important shift. You can be held responsible even without directly committing fraud — if you ignored clear warning signs.
Here is what HMRC can now do:
- Remove Gross Payment Status (GPS) immediately
- Block reapplication for GPS for five years (previously one year)
- Make the business that entered into the fraud-connected transaction liable for the lost tax
- Impose a penalty of up to 30% of the lost tax — on the business, its directors, and connected individuals
These rules are targeted at businesses that knowingly engage with fraudulent supply chains. Compliant contractors who carry out proper due diligence are not the intended target of this legislation. That said, good record-keeping is no longer optional. It is your protection.
Are you responsible for what your subcontractors do?
Not automatically — but you can be, if you ignored obvious red flags. HMRC can now pursue businesses in the supply chain that entered into transactions they knew — or clearly should have known — were connected to fraud.
The standard is “knew or should have known.” Honest mistakes by compliant contractors are not the focus of these rules. What matters is whether you carried out proper checks before engaging a subcontractor.
In practice, this means:
- Verify every subcontractor correctly before you engage them
- Keep full records of every check you carry out
- Act on warning signs — do not ignore suspicious payment arrangements
Which payments are being removed from CIS?
From 6 April 2026, payments to certain bodies will no longer fall under CIS rules. This applies to:
- Local authorities
- Certain public bodies
HMRC previously operated an Extra Statutory Concession allowing these bodies to be treated as holding GPS. The new legislation formalises this. If you carry out construction work for these organisations, there will be no CIS deductions and no monthly reporting required.
This is a simplification measure. It removes CIS from areas where it was never intended to apply.
Are NIL returns coming back?
Yes. If you are a contractor and make no subcontractor payments in a given month, you will once again be required to file a NIL CIS return. This requirement was removed in 2015. It is returning from 6 April 2026.
There is one exception. If you have already notified HMRC in advance that you will not be making any subcontractor payments that month, you do not need to file.
HMRC is reintroducing this obligation because its removal led to erroneous late-filing penalties — not fewer admin burdens. Set up a monthly reminder now. A missed return means a penalty.
What should you do before April 2026?
You do not need to panic. But you do need to act. Here are four practical steps.
1. Review your subcontractor verification process
Check that you verify all subcontractors correctly before engaging them. Keep records of every check. Know their compliance position before any work begins.
2. Update your internal controls
Review your CIS processing routines. Update your month-end checklists. Make sure your documentation is complete and current.
3. Brief your team
Anyone handling admin or finance needs to understand the new rules. They should know when NIL returns apply, how to spot risk indicators, and why accurate reporting protects the business.
4. Talk to an accountant now
These changes carry real financial risk. Losing GPS affects your cash flow immediately. If you are based in Kent or the south east, speaking to an accountant in Medway who understands CIS is the fastest way to get clarity on your position.
Not sure whether these changes affect your business? Contact Lidertax.
At Lidertax, we help contractors and small businesses across the UK stay on top of their HMRC obligations. If you are unsure how these CIS changes affect your situation, get in touch. We offer a free initial consultation.
As a trusted accountant in Medway, we work with sole traders, limited companies, and subcontractors at every stage — from CIS registration through to monthly compliance and year-end accounts.
Not sure whether these CIS changes affect your business? Get in touch — we’re happy to help. Whether you’re a sole trader, a limited company, or a subcontractor working across multiple sites, the rules apply to you. A quick conversation now can save you a costly mistake later.
FAQ
1. What is changing in CIS from April 2026? HMRC is introducing stronger anti-fraud powers, a five-year GPS reapplication ban, supply chain liability rules, removal of CIS from payments to public bodies, and the return of mandatory NIL returns for months with no subcontractor payments.
2. What is Gross Payment Status and why does it matter? GPS allows subcontractors to receive payments in full without CIS deductions. Losing it means HMRC deducts 20% or 30% from every payment you receive. From April 2026, GPS can be removed immediately where fraud is involved.
3. Can I be penalised for fraud I did not commit? Yes, if HMRC determines you knew or should have known the transaction was connected to fraud. The rules do not target honest mistakes by compliant contractors. Proper due diligence and clear records are your best protection.
4. Do I need to file a NIL CIS return when I pay no subcontractors? Yes, from April 2026 this requirement returns. If you make no subcontractor payments in a month, you must file a NIL return — unless you have pre-notified HMRC in advance.
5. Where can I get help with CIS compliance in Kent? Lidertax is an accountant in Medway offering CIS compliance support for contractors and small businesses across Kent and the south east. Contact us for a free initial consultation.
