Changes to the Construction Industry Scheme took effect from 6 April 2026. Contractors should review their monthly processes, particularly where no subcontractors have been paid.
Mandatory nil returns
From 6 April 2026, a contractor that makes no payments to subcontractors during a tax month must either file a nil CIS return or notify HMRC in advance that no such payments will be made.
This gives HMRC a clear indication that a return is not missing and can prevent unnecessary late-filing penalties.
CIS reporting periods and deadlines
The CIS tax month runs from the 6th of one month to the 5th of the following month. The return must normally reach HMRC by the 19th after the end of that tax month.
For every reporting period, complete one of these steps
- Submit a return detailing subcontractor payments.
- Submit a nil return where no subcontractors were paid.
- Use the appropriate advance notification where no payments are expected for a period.
Payments to local authorities and public bodies
From 6 April 2026, qualifying payments made to local authorities and specified public bodies fall outside the scope of CIS. Where the exemption applies, the contractor does not verify the body, make CIS deductions or include the payment on the monthly return.
The exemption depends on the organisation meeting the statutory definition, so it should not be assumed that every public-sector-connected organisation qualifies.
Existing contractor duties continue
Contractors must continue to register where required, assess employment status, verify new subcontractors, apply the HMRC deduction rate, calculate deductions correctly, submit returns, pay deductions to HMRC, issue deduction statements and maintain adequate records.
Subcontractor verification
Before paying a new subcontractor, a contractor should normally verify them with HMRC. HMRC confirms whether they should be paid gross, under the standard deduction rate or under the higher deduction rate.
Calculating deductions
CIS deductions are generally calculated on the labour element after excluding VAT and qualifying materials. The contractor should retain evidence supporting amounts excluded from the calculation.
Payment and deduction statements
Where a deduction is made, provide a statement showing the contractor and subcontractor details, gross payment, qualifying materials, deduction and net payment.
Employment status remains important
CIS registration does not automatically mean that a worker is self-employed. The true working relationship must be considered, including control, personal service, substitution, financial risk, equipment and integration into the contractor’s business.
A practical monthly checklist
- Review every subcontractor payment in the tax month.
- Verify new subcontractors.
- Confirm that the correct deduction rates were used.
- Review labour, materials and VAT treatment.
- Issue payment and deduction statements.
- Reconcile deductions to the accounting records.
- Submit the return by the 19th.
- Submit a nil return where no payments were made.
- Use advance notification where no subcontractor payments are expected.
- Pay deductions to HMRC by the relevant PAYE deadline.
How Charterlink can help
Charterlink provides contractor and subcontractor registration, verification, monthly CIS returns, nil returns, deduction calculations, statements, reconciliations and HMRC correspondence support.
Book Your Free ConsultationOfficial guidance: HMRC: Simplifying and improving CIS administration.
This article provides general information and should not be treated as advice tailored to a particular business. Individual circumstances should be reviewed before action is taken.