Calendar (planned, date-driven)

CIS April 2026 compliance checklist for contractors

Three CIS changes take effect on 6 April 2026. Contractors must review their Gross Payment Status compliance, prepare for mandatory nil returns, and update processes for public body contracts before the new rules begin.

Change event: CIS reform: GPS fraud powers, nil returns, and public body exemptions Effective 6 April 2026

What is changing

Three changes to the Construction Industry Scheme take effect on 6 April 2026. Together they strengthen HMRC's fraud powers, reintroduce nil return filing, and formalise the treatment of public body payments.

  • GPS fraud powers — HMRC can immediately cancel Gross Payment Status where fraud is involved, with a 5-year reapplication ban (up from 12 months). Liability extends to directors and connected persons who knew or should have known about fraudulent tax evasion.
  • Mandatory nil returns — contractors who make no subcontractor payments in a tax month must file a nil return within 14 days, or pre-notify HMRC at least 14 days before the month.
  • Public body exemption — payments to local authorities and other public bodies listed in Finance Act 2004 s.59(1)(b)-(k) are removed from CIS scope entirely, replacing the previous Extra Statutory Concession.
Changes take effect
6 April 2026
Consultation closed
3 February 2026
Draft regulations
Income Tax (CIS) (Amendment) Regulations 2026
GPS fraud powers source
Finance Bill 2025-26 (amends Finance Act 2004)
GPS reapplication ban
5 years (previously 12 months)
Nil return deadline
Within 14 days after end of tax month
Revenue projection (2026-27)
GBP 205 million (OBR certified)

Review your GPS compliance

The new fraud powers allow HMRC to cancel Gross Payment Status immediately — without the existing notice period — where a business is connected with fraudulent tax evasion. The penalty can reach 30% of lost tax and applies to the business, its directors, and other connected persons.

The test is whether you knew or should have known that payments were connected with fraud. This goes beyond intentional knowledge to include carelessness and failure to ask reasonable questions about your supply chain.

Before 6 April, you should:

  • Check that your tax returns and CIS returns are up to date and accurate
  • Verify your National Insurance contributions are current
  • Review your payment history for any irregularities
  • Confirm that subcontractors in your supply chain are legitimately registered
  • Document your due diligence processes for new subcontractors

❗ Action required

Review your GPS compliance tests now. Under the new rules, HMRC can cancel your GPS immediately for fraud without the current procedural steps, and the reapplication ban increases from 1 year to 5 years. Ensure your tax returns, NI payments, and CIS filings are all correct and up to date.

Prepare for nil returns

From 6 April 2026, if you make no subcontractor payments during a tax month you must file a nil CIS return within 14 days after the end of that month. Nil returns were abolished in 2015 but are being reinstated because their removal did not reduce administrative burdens and resulted in erroneous late filing penalties.

You have two options:

  • File a nil return within 14 days after the end of each tax month where you made no contract payments
  • Pre-notify HMRC at least 14 days before the tax month that you will not be making any payments — this exempts you from filing the nil return for that month

Standard late filing penalties apply if you miss the deadline and have not pre-notified.

❗ Action required

Set up a nil return process before April. Decide whether you will file nil returns monthly or use the advance notification exemption for months where you expect no subcontractor payments. Update your calendar or payroll workflow to track the 14-day deadlines.

Update public body contracts

If you carry out construction work for local authorities, health service bodies, or other public bodies listed in Finance Act 2004 s.59(1)(b)-(k), payments from these bodies will be fully exempt from CIS from 6 April 2026.

This replaces the previous Extra Statutory Concession, which treated public bodies as if they held GPS. The new regulation goes further: it removes these payments from CIS scope entirely, meaning no CIS deductions are required and no CIS reporting is needed.

If you currently apply CIS deductions or reporting to public body payments under the old concession, you should update your processes to reflect the full exemption from April.

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