CIS Changes 2026: What Construction Businesses Need to Know
What are the new responsibilities for contractors and subcontractors?
CIS Rules 2026: What’s Changed?
The Construction Industry Scheme (CIS) rules changed significantly from April 2026, bringing new responsibilities for contractors and subcontractors.
We break down the main CIS changes and what your business should be doing to stay compliant.
New Responsibilities for Contractors
The Construction Industry Scheme (CIS) rules changed significantly from 6 April 2026, bringing new responsibilities for contractors and subcontractors across the UK construction industry.
The Government and HMRC state the reforms are designed to improve CIS compliance, reduce fraud and strengthen reporting requirements. Unfortunately, for construction businesses, that means more admin, stricter HMRC checks and higher penalties for getting things wrong.
Here’s a straightforward breakdown of the main CIS changes for 2026 and what your business should be doing to stay compliant.
CIS Nil Returns Are Mandatory Again
One of the biggest CIS changes in 2026 and an increased admin burden is the return of mandatory CIS nil returns. This rule was removed in 2015 but has now been reinstated by HMRC.
If you’re a CIS contractor and you haven’t paid subcontractors during a tax month, you must now either:
- Submit a CIS nil return; or
- Notify HMRC in advance that no payments will be made.
Missed returns can trigger automatic late filing penalties starting at £100, with further charges added over time.
Contractors Now Carry More Responsibility for Subcontractor Tax Compliance
Perhaps the harshest CIS change is the increased responsibility placed on contractors to check and keep an eye on their subcontractors’ tax compliance.
HMRC can now take strong action where a contractor “knew or should have known” that tax fraud or non-compliance was happening within their subcontractor supply chain.
In practice, this means contractors will need to carry out more thorough checks before working with subcontractors and keep good records showing they’ve done their due diligence.
If HMRC believe a contractor has failed to make proper checks, the consequences could include:
- Penalties of up to 30% of the unpaid tax
- The contractor being liable for the unpaid tax
- Loss of Gross Payment Status
For contractors, it’s no longer enough to verify a subcontractor at the outset. Under the new CIS rules, they have to perform regular checks, ensure accurate CIS reporting and provide clear evidence of audit trails.
This is especially important for construction businesses working with large numbers of subcontractors or labour-only teams.
VAT Compliance Can Affect Gross Payment Status
HMRC has also tightened the rules around Gross Payment Status (GPS).
Late VAT returns, unpaid VAT or wider tax compliance issues could now rob you of your GPS.
For subcontractors, losing Gross Payment Status can seriously affect cash flow and contract opportunities.
Public Sector Bodies Are Now Exempt From CIS
From April 2026, payments made to local authorities and certain public sector organisations are outside the scope of CIS.
This removes unnecessary CIS deductions and reporting requirements for qualifying public sector contracts.
What Construction Businesses Should Do Now
To stay compliant with the new CIS rules, construction businesses should:
- Review their CIS reporting procedures
- Carefully verify and continue to monitor subcontractors
- Keep accurate audit trails and records
- Stay on top of VAT and CIS deadlines
- Put systems in place for monthly nil returns
- Review Gross Payment Status compliance regularly
Need Help With CIS Compliance?
At Swinton Accountants, we support construction businesses with CIS returns, subcontractor verification, VAT compliance, bookkeeping, payroll and tax planning.
If the 2026 CIS changes affect your business, our team can help you stay compliant and avoid costly HMRC penalties.
Get in touch with us for practical CIS support and straightforward advice. Call 01603 812131 or email enquire@swintonaccountants.co.uk