Recent 2024/25 CIS Updates: What Contractors & Subcontractors Must Know

Why CIS Rules Keep Changing

The Construction Industry Scheme (CIS) is one of HMRC’s most scrutinised compliance areas. In recent years, new rules have tightened what contractors can deduct, expanded penalties, and increased digital reporting requirements.

If you’re not aware of the latest updates, you risk penalties, denied deductions, or even losing Gross Payment Status. This article summarises the key 2024/25 changes — and how Wexley ensures your business stays ahead.

Key CIS Updates for 2024/25

1. Stricter Evidence Rules for Materials

• Contractors must now hold direct cost evidence (invoices, receipts) for materials deducted before paying subcontractors.

• HMRC can disallow deductions if records are missing.

• Increased risk of penalties if contractors try to offset costs without proof.

👉 This change is designed to crack down on inflated or unverifiable material costs.

2. Deemed Contractor Threshold Adjustments

• Businesses that spend over £3 million on construction in a rolling 12-month period must register as deemed contractors.

• HMRC has clarified that connected companies’ spending is aggregated when applying the threshold.

• Many property developers and corporate landlords are now being caught under CIS.

3. Expanded Penalty Powers

• Penalties for incorrect returns (not just late returns) are now more aggressively enforced.

• Misreporting subcontractor details, deduction rates, or verification numbers can trigger automatic fines.

• Persistent offenders face loss of Gross Payment Status (GPS).

🔗 HMRC: CIS Returns & Penalties

4. CIS in the Digital Era

• HMRC is preparing for integration with Making Tax Digital (MTD).

• Contractors may soon be required to maintain digital CIS records and submit quarterly updates.

• Early preparation now avoids costly system overhauls later.

Why These Updates Matter for Contractors

• Higher risk of penalties → automatic, escalating, and costly.

• Tighter evidence requirements → poor record keeping = deductions disallowed.

• More businesses caught as deemed contractors → sudden CIS obligations for non-construction firms.

• Future digital integration → systems must be upgraded in advance.

How Wexley Keeps Clients Ahead of CIS Changes

At Wexley & Associates, we:

• Review your contracts to check if you fall under new deemed contractor rules.

• Maintain watertight evidence packs for material deductions.

• File CIS returns with full accuracy, avoiding expanded penalties.

• Future-proof your business with digital-ready record-keeping.

Staying compliant isn’t just about today’s rules — it’s about anticipating tomorrow’s.

Stay Compliant, Stay Ahead

CIS compliance is evolving fast. Contractors who fail to adapt risk HMRC penalties, cash flow problems, and reputational damage.

👉 Contact Wexley & Associates today to safeguard your business against the latest CIS changes and prepare for what’s next.

References

• HMRC: CIS 340 – Construction Industry Scheme: Guide for Contractors and Subcontractors

• HMRC: CIS Returns & Penalties

• Related Wex Insider article: Penalties, Disputes & HMRC Assessments in CIS