If you run a construction business and there are months when you pay no subcontractors, the rules just changed under you. From 6 April 2026, leaving HMRC to assume "no payment means nothing to file" can trigger a £100 penalty for every month you stay quiet.
TL;DR: From 6 April 2026, contractors under the Construction Industry Scheme must file a nil return for any tax month with no subcontractor payments, or tell HMRC in advance they will be inactive. Miss both and a £100 late-filing penalty applies per return. The deadline is the 19th of the following month.
What's changing with CIS nil returns in April 2026?
From 6 April 2026, filing a nil return becomes mandatory again. If you are a CIS contractor and you make no payments to subcontractors in a tax month, you must either submit a nil monthly return or notify HMRC in advance that you will be inactive (GOV.UK, 2025).
This reinstates an obligation that was relaxed back in 2015. The change sits in the wider package of CIS administrative reforms taking effect on the same date, and HMRC has costed the supporting system changes at around £80,000 (GOV.UK, 2025). The reason is practical: HMRC found it hard to tell a genuinely dormant contractor apart from one quietly failing to report.
What is a CIS nil return?
A nil return is the standard monthly CIS return you file when you have made no payments to subcontractors in that tax month. It tells HMRC you are still an active contractor but had nothing to report.
The CIS tax month runs to the 5th, and the return is due by the 19th of the following month (GOV.UK, 2026). So a nil return for the month ending 5 May is due by 19 May. The same deadline applies whether the return reports £200,000 of payments or none at all. What we see most often is a contractor who deregisters mentally during a quiet spell, then gets a penalty notice for a month they assumed didn't count.
Who does this affect?
This affects every registered CIS contractor, but it bites hardest where work is uneven. Seasonal trades, firms between projects, and businesses that use subcontractors only occasionally are the ones most likely to hit a month with nothing to report.
If you are registered as a contractor and your subcontractor spend drops to zero for a month, you are now in scope. One question clients always ask is whether registering as a contractor was even necessary in their case. If you only ever pay your own staff through PAYE and never engage subcontractors, you may not need to be in CIS at all. If you are not sure how your structure interacts with these rules, our guidance on choosing between sole trader and limited company is a useful starting point before you look at CIS registration.
How do you avoid filing a nil return every month?
You file an inactivity request. If you know you will not pay any subcontractors for a stretch, you can tell HMRC in advance and they will stop expecting monthly returns for up to six months (GOV.UK, 2026).
That covers a genuine gap between projects without leaving you exposed to per-month penalties. The catch is the request only lasts six months, so a long dormant period needs renewing. In our experience the inactivity request is the cleaner option for firms that wind down over winter, while month-by-month nil returns suit businesses with sporadic subcontractor use that could restart at any time.
What are the penalties for missing a CIS return?
The full CIS late-filing penalty regime applies to nil returns from April 2026. Miss the 19th deadline and the penalties escalate the longer the return stays outstanding (GOV.UK, 2026):
- 1 day late: £100
- 2 months late: a further £200
- 6 months late: £300 or 5% of the CIS deductions on the return, whichever is higher
- 12 months late: a further £300 or 5% of the deductions, whichever is higher
Penalties are charged per return, so three missed months mean three separate £100 charges, not one. For a nil return there are no deductions to apply the 5% to, so the fixed amounts are what sting. These mirror the escalating structure HMRC uses elsewhere, much like the late-filing penalties for corporation tax. You have 30 days from a penalty notice to pay or appeal.
What else changed in the April 2026 CIS reforms?
The nil return rule is the headline, but it travels with two other changes worth knowing. Gross payment status is harder to recover once lost. The inactivity period before you can reapply after a cancellation rises from one year to five years (Johnston Carmichael, 2025).
HMRC has also widened its anti-fraud reach across the scheme, with penalties of up to 30% of lost tax for those who facilitate CIS fraud, and payments to certain public bodies are being taken outside CIS deductions altogether (GOV.UK, 2025). If you hold gross payment status, the message is to keep your wider filing record clean, because the route back is now far longer.
What contractors should do now
Treat every tax month as a filing month, even the empty ones. Put the 19th in your calendar as a recurring date, and decide for each quiet month whether you file a nil return or lodge an inactivity request.
If you use accounting or CIS software, check it can submit nil returns and that reminders are switched on. Good record-keeping habits carry over from other regimes here, and the same discipline that keeps you compliant under Making Tax Digital will keep your CIS filings on time. If a penalty notice does arrive for a month you genuinely had no activity, the same appeal route applies as with HMRC late-payment penalties, provided you have a reasonable excuse.
Frequently Asked Questions
Do I have to file a CIS nil return if I paid no subcontractors?
Yes, from 6 April 2026. If you are a registered contractor and made no subcontractor payments in a tax month, you must file a nil return or notify HMRC in advance that you will be inactive. Doing neither risks a £100 penalty.
When is a CIS nil return due?
By the 19th of the month following the tax month. The CIS tax month ends on the 5th, so a return covering the month to 5 May is due by 19 May. Nil returns share the same deadline as full returns.
Can I stop filing returns during a quiet period?
Yes, by submitting an inactivity request. HMRC will pause the expectation of monthly returns for up to six months. After that the request needs renewing, or the monthly nil return obligation resumes.
What is the penalty for a late CIS nil return?
It starts at £100 the day after the deadline, rises by £200 at two months, and adds £300 (or 5% of any deductions, whichever is higher) at both six and twelve months. Each missed return is penalised separately.
Does this affect my gross payment status?
Indirectly. From April 2026 the wait to reapply for gross payment status after it is cancelled rises from one to five years, so keeping every return on time, including nil returns, matters more than before.
If you want a second pair of eyes on your CIS filing setup before the next deadline, get in touch. We can review whether nil returns or an inactivity request fits your work pattern and make sure nothing slips through on the 19th.