There are new rules for contractors operating under the Construction Industry Scheme (CIS). From 6 April 2026, CIS contractors will be legally required to submit a monthly CIS return – even if no subcontractors have been paid.
If you work in the construction industry, it’s important to understand how these updates will impact your day-to-day operations. Staying on top of government policy changes helps you keep your business compliant and avoid unexpected fines.
Here’s a simple breakdown of the changes and how you can prepare.
What’s changing with the CIS in April 2026?
The biggest change is the return of mandatory monthly CIS returns. From April 2026, contractors must submit a return every month, even if they haven’t paid any subcontractors. These are known as ‘nil returns’.
You’ll need to either:
- file a monthly nil return, or
- tell HMRC in advance if you plan to have a month with no subcontractor payments
This rule was originally removed in 2015 to cut down on admin work. But many businesses failed to keep HMRC updated, which led to a high number of penalty appeals.
You’ll need to send your monthly returns to HMRC by the 19th of every month, following the last tax month.
Another big update impacts public sector contracts. From 6 April 2026, payments made to local authorities and certain public sector bodies will be completely exempt from the CIS.
This removes the need for unnecessary CIS deductions and reporting when working on these specific public sector contracts.
Update: new penalty framework
Because monthly nil returns are becoming mandatory again, HMRC is bringing back the full CIS late filing penalty regime. This is to make sure businesses follow the rules and to reduce the number of prolonged penalty appeals.
If you miss a deadline, the penalty framework will look like this:
| How late is the return? | Penalty |
| 1 day late | £100 fixed penalty |
| 2 months late | £200 fixed penalty |
| 6 months late | £300 penalty, or 5% of the CIS deductions on the return, whatever is higher |
| 12 months late | £300 penalty, or 5% of the CIS deductions on the return, whatever is higher |
For any returns later than this, you could get an additional penalty of up to £3,000, or 100% of the CIS deductions on the return, whichever is higher.
Read more: What is an HMRC tax investigation?
What does this mean for me?
If you’re a contractor in the construction industry, you need to prepare for extra monthly admin. You should review your current payroll and reporting processes to make sure you can handle submitting monthly nil returns.
For businesses that already file nil returns voluntarily, you probably won’t notice much of a practical change. But if you stopped filing them, you need to set up reminders so you don’t get caught out by the strict new penalty system.
It’s a good idea to speak with your accountant or tax adviser. They can help you set up an inactivity request with HMRC if you know you won’t be paying subcontractors for a set period.
Staying informed and updating your processes now will give you peace of mind as these new rules come into force.
Small business guides and resources
- How to register as self-employed with HMRC
- Which trade earns the most – and where?
- Making Tax Digital for business income tax
- HMRC penalties for late tax returns and late payment
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