CIS Nil Returns Are Back: What Every UK Contractor Needs to Know Before 6 April 2026

If you’re a contractor operating under the Construction Industry Scheme (CIS), there’s a change coming on the 6th of April 2026 that you cannot afford to ignore. HMRC is bringing back mandatory CIS Nil Returns, and this time the penalties are automated and escalating. Here’s everything you need to know.

A bit of history: what changed in 2015?

The requirement for contractors to submit monthly Nil Returns where no subcontractor payments were made was abolished in 2015 as part of a CIS simplification drive. At the time, it was welcomed as a sensible reduction in admin. But the reality didn’t pan out that way.
HMRC found that removing the nil filing obligation didn’t actually reduce the burden on contractors or on their own teams, and as Hazlewoods note in their April 2026 CIS overview, it instead created a wave of erroneous late filing penalties. Many contractors simply forgot to tell HMRC they weren’t paying subs that month, and automated penalties started flying out the door.

What’s changing on the 6th of April 2026?

Starting in April 2026, contractors will be required by law to either file a CIS return every month (including nil returns in months where they have not used a subcontractor), or inform HMRC in advance that they will not pay subcontractors that month by submitting an inactivity request. This was confirmed as part of the Autumn Budget 2025 announcement on GOV.UK.

In plain English: silence is no longer an option. Every tax month must be accounted for, one way or another. The full detail sits in HMRC’s Construction Industry Scheme: proposed simplification and administrative amendments consultation, which is worth a read if you want the legislative background.

What are the penalties if you miss a nil return?

From April 2026, HMRC will reinstate the full CIS late filing penalty regime. In addition to the first £100 fixed penalty, late filers may subsequently be charged a tax-geared penalty at 6 months of a minimum of £300 or 5% of any liability which should have been shown on the return, and a further tax-geared penalty at 12 months. Because this is an automated penalty, you will not be able to argue with it or appeal it. You can read how HMRC’s own penalty logic works in the HMRC internal manual CISR61280 on Nil Returns.

With HMRC’s move toward AI-driven audits and the full integration of Making Tax Digital (MTD), these penalties are now automated. In the last tax year, monthly penalties spiked to nearly 44,000, reintroducing Nil Returns will only push that higher for businesses with seasonal workflows. Prevail Accountancy have a useful plain-English breakdown of what the April 2026 CIS changes mean in practice.

The get-out clause: pre-notification (the “dormant period” rule)

There is a legitimate way to pause your monthly filing obligations, but you need to plan ahead. If you know your business will not be paying any subcontractors for a while, you can use a pre-notification rule. You must warn HMRC 14 days before your quiet period begins. This tells their system to pause your monthly reporting requirements.
You can pre-notify HMRC of “dormant periods” for up to 6 months, this is the only way to legally stop the clock on monthly filings and protect your compliance record.
This is particularly important for businesses with seasonal workflows, groundworkers who slow down over winter, or specialist contractors who have gaps between major projects. Hazlewoods have a good summary of the dormant period rules and how to use them if you want more detail.

What about payments to local councils and public bodies?

From 6 April 2026, payments made to local authorities and certain public sector bodies will be fully exempt from the Construction Industry Scheme. This replaces an old concession by introducing a new regulation (Regulation 24ZA) that removes these payments from CIS entirely. If you are a head contractor paying a local council for services, you no longer need to worry about deductions or reporting. BDO cover this and other often-missed CIS obligations in their guide on getting the Construction Industry Scheme right.

Who does this affect?

This applies to all CIS contractors, but it is particularly relevant for contractors that experience periods of inactivity, seasonal work, or gaps between projects. It also catches a group that often flies under the radar: deemed contractors, non-construction businesses who breach the £3 million CIS spending threshold may see increased touchpoints with HMRC unless they set up a robust pre-notification routine for months with no subcontractor payments. Hazlewoods HMRC’s Agent Update Issue 141 goes into detail on how this group is affected.

What should you do right now?

1. Check whether you paid any subcontractors in March. If not, you need to file a Nil Return or confirm you’ve already submitted an inactivity request via your HMRC online CIS account.
2. Set up a recurring diary reminder for the 14th of each month, the filing deadline is 14 days after the end of each tax month.
3. Identify any upcoming quiet periods and pre-notify HMRC at least 14 days before they start.
4. Talk to your accountant or CIS software provider about automating nil return submissions so nothing slips through the net.

The bottom line

The reintroduction of mandatory CIS Nil Returns isn’t a surprise, it was flagged in the Autumn Budget 2025 and consulted on publicly by HMRC. But that doesn’t mean every contractor is ready for it. The combination of automated penalties and a full reinstatement of the escalating penalty regime means that a quiet month on site could become an expensive one if you’re not on top of your filings.
If you’re unsure where you stand, speak to your accountant today. The cost of a quick conversation is considerably cheaper than a stack of automated HMRC penalty notices.