CIS nil returns are back from April 2026 — what contractors need to do differently

If this month has been quiet on site, your CIS return still needs to land with HMRC. From 6 April 2026, monthly nil returns are back — and so is the full late filing penalty regime that HMRC quietly parked nearly a decade ago.

This is one of those Budget 2025 announcements that looks procedural on the face of it but carries real cost if missed. Here’s the full picture, what you need to do differently, and the practical steps to keep HMRC off your back.

A quick refresher on the scheme

The Construction Industry Scheme (CIS), set out in Part 3, Chapter 3 of the Finance Act 2004 (ss.57–77), governs how payments from contractors to subcontractors are taxed in the construction sector. If you’re the contractor paying subbies for construction work, you’re required to:

• Verify each subcontractor with HMRC before paying them
• Deduct 20% income tax from payments (or 30% if they’re unverified), unless they hold gross payment status
• File a monthly CIS return by the 19th of each month, reporting what you’ve paid and what you’ve deducted
• Issue monthly payment and deduction statements to each subcontractor

The operational detail sits in the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045).

What’s changing in April 2026

Currently, if you haven’t paid any subcontractors in a given month, you don’t need to file anything. From 6 April 2026, that stops. Every contractor registered under CIS will need to file a monthly return regardless of whether any payments were made. If no payments occurred, you file a nil return.

There is an alternative. If you know you won’t be paying subcontractors for a stretch, you can submit an inactivity request to HMRC under regulation 4 of SI 2005/2045, notifying them of an upcoming period of inactivity. That tells HMRC not to expect returns during that window, so you don’t need to file monthly nil returns for the covered period. It’s worth using if your workload is genuinely project-led and you have clear gaps.

Why HMRC is reinstating nil returns

If any of this rings a bell, it’s because nil returns used to be mandatory. They were scrapped in 2015 with the aim of reducing the administrative burden on both contractors and HMRC. In practice, the change didn’t land as intended. Contractors were still expected to notify HMRC about periods of inactivity, but many didn’t, which meant HMRC kept issuing penalty notices for “missing” returns that were actually nil — and then having to cancel them on appeal. The result was a backlog of penalty disputes that ate time on both sides, and HMRC eventually suspended all late-filing penalties other than the initial £100.

Bringing nil returns back tidies that up. It also gives HMRC a clearer, more active picture of who is trading in the sector and when.

The penalty regime is back in full

From April 2026, the full late filing penalty regime under Schedule 55 of the Finance Act 2009 applies to CIS returns once more:

• An initial £100 fixed penalty as soon as the return is late
• A further £200 fixed penalty after two months
• After six months, an additional penalty of £300 or 5% of the tax liability, whichever is higher
• A further tax-geared penalty at twelve months, with the amount depending on the reason for late filing — deliberate non-filing attracts the heaviest charges

These penalties stack. A single overlooked return that slips past six months is already at £600 minimum — for what might have been a straightforward nil filing.

What to do now

Three practical moves before the April filing cycle:

1. Add the 19th of each month to your calendar as a non-negotiable CIS return deadline, whether or not you’ve paid any subbies that month
2. If you’ve got clear quiet periods coming up, consider an inactivity request under SI 2005/2045 rather than monthly nil filings
3. Make sure whoever handles your CIS — in-house or external — is crystal clear that “no payments this month” no longer means “nothing to file”

It’s the sort of admin that looks small until it isn’t. A £300 penalty on a nil return is an easily avoidable headache.

How we can help

Running a construction business, you’ve got plenty more pressing things to think about than remembering the 19th of every month. At Chippendale & Clark we handle CIS returns for our contractor clients as part of our monthly compliance work, including submitting inactivity requests where that’s the right call. If you’d like us to take it off your plate, get in touch. We’ll answer the phone.