Article
What is going to change in the Construction Industry Scheme?
Changes have been made to the Construction Industry Scheme (CIS) from 6th April 2026, after a consultation which ended in February 2026. But what are the proposed changes?
Last updated 18 Mar 2026 | First published 18 Mar 2026
By Helen Wood, CA 2 min read
Contractors
What is the Construction Industry Scheme (CIS)?
CIS is a mandatory scheme affecting contractors and subcontractors in the construction industry. Where contractors hire self-employed subcontractors to do some of the work they are contracted to carry out, they may have to deduct 20% or 30% from their agreed fees and pay those deductions across to HMRC. These deductions are treated as advance payments of income tax and national insurance contributions (NICs) for the subcontractors.
For a full summary of how CIS works, see our guide here.
Why did the Government propose CIS amendments?
The Government announced a technical consultation on CIS in the Autumn Budget 2025. It stated that the reasons for change are preventing CIS fraud, simplifying the scheme and improving the administration of CIS.
What are the changes to CIS?
Exempt payments to Local Authorities (LAs) and other public bodies
Where LAs and certain public bodies are acting as subcontractors, there has historically been an Extra Statutory Concession (ESC) in place. This ESC has meant that those LAs and public bodies are treated as if they have Gross Payment Status.
Under the changes, a new regulation was brought in, which means certain public bodies will be exempt from CIS altogether and do not need to rely on the current ESC.
Reinstating nil return requirement for contractors
Before 2015 all contractors had to file a nil return if there were periods where they did not make any CIS payments to subcontractors. This requirement was removed to try and reduce admin for contractors and HMRC.
However, this has had unintended consequences such as late payment penalties for contractors where they had no deduction to pay over to HMRC.
Under the proposed rule change, contractors would be required to file a nil return if they make no subcontractor payments in a month, unless they notify HMRC in advance.
What does this mean for contractors and subcontractors under CIS?
The changes began from 6th April 2026, at the start of the 2026/27 tax year.
Contractors
Contractors will need to update CIS reporting processes, in order to file nil returns and/or make advance notifications to HMRC in tax months where they do not have any deductions from subcontractors.
As a reminder, if you do not believe you will have any CIS deductions to make for some time, tick the inactivity box on your next CIS return to trigger a six-month break from making CIS returns.
Subcontractors
Subcontractors should note there are no changes to deduction rates or the rules around Gross Payment Status in the proposed rule changes. It is important to note that registered subcontractors typically have CIS deductions taken at 20% rather than 30%, so it remains beneficial to your cashflow to register.
How can TaxAssist Accountants help?
CIS rules are complex and further changes can feel daunting. TaxAssist Accountants can help you navigate the existing and proposed rules for CIS contractors, ensure you meet your verification, filing and deduction obligations and provide you with peace of mind that you are compliant. Call us on 01234 331777 or use our online contact form.
Frequently Asked Questions
No. You only need to register if you use subcontractors.
Use HMRC’s CEST tool, but if you are unsure, speak to your accountant for advice on employment status.
Currently contractors do not have to make a nil return for months they do not use subcontractors, but this can cause late payment penalties that should not apply to them. In future contractors must either a) tell HMRC in advance that they did not use subcontractors within the tax month or b) make a nil return.
Currently if Local Authorities or public bodies are construction subcontractors, they have to rely on an Extra Statutory Concession to be deemed to have Gross Payment Status to avoid having CIS deductions made from their payments. Under the new proposals they will fall outside the CIS rules altogether.
The consultation closed in February 2026, and the planned commencement date is 6th April 2026.
Last updated 18 Mar 2026 | First published 18 Mar 2026
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Helen Wood, CA
Helen is a qualified chartered accountant (CA) and joined TaxAssist in 2025 following three years as a freelance content writer for clients in the tax and accounting publishing sector. Prior to this, She spent 17 years at Big Four and Top 10 accountancy firms. Helen writes clear and helpful articles on tax and accounting for businesses and individuals.
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