What is going to change in the Construction Industry Scheme?

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 01535 601199 or use our online contact form.

Last updated: 10th April 2026