We outline the changes to the CIS from April 2026.
In our article ‘Further Construction Industry Scheme (CIS) Amendments’, ICB relayed two CIS amendments members need to consider:
‘Tackling Fraud’
This measure is outlined in the Policy Paper ‘Tackling Construction Industry Scheme fraud’ and gives HMRC new powers where they believe the employer ‘knew or should have known’ there was an attempt at CIS tax avoidance or evasion:
- Withdrawal / cancellation of Gross Payment Status (GPS) of the taxpayer. Plus, if GPS is removed, the time limit to reapply will increase from one year to five;
- Require the employer / contractor to pay the lost tax: and
- Impose a penalty equal to 30% of the lost tax revenue
Finance Bill 2026 inserts a new section ‘Liability for things done in the knowledge of deliberate failures to comply’ into the Finance Act 2004 which is the primary legislation that defines the CIS.
Simplification and Improvements
These measures are the result of a consultation aimed at simplifying and updating the Scheme to:
- Exempt payments made to local authorities or public bodies from the scope of the CIS – the simplification; and
- Require the filing of a nil return when no contract payments are made in a month (unless HMRC have been notified HMRC in advance) – the improvement / update
This is amending the operational detail of the CIS and covered in secondary legislation. The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2026 change the 2005 Regulations.
For Bookkeepers
The purpose of the above is to remind members of the changes from April 2026. But, also, advise on the legislative route:
- Primary legislation (an Act) introduces something, e.g. the Finance Act 2004 introduced and provided the legislative basis for the CIS; but
- Secondary legislation (Regulations) tell us how something will work in practice, e.g. The Income Tax (Construction Industry Scheme) Regulations 2005 tell us how it will operate.
