May 2026
Technical and Client Update
In this issue
April 2026 changes to the Construction Industry Scheme (CIS)
Credit control: the quiet discipline that keeps a business alive
State Pension amounts increase…
Are you ready for E-invoicing?
April 2026 changes to the Construction Industry Scheme (CIS)
As outlined in Autumn Budget 2025, several changes took place on 6 April that may affect those who use the Construction Industry Scheme.
From April 2026, contractors are 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.
From April 2026, with the nil filing requirement back in place, HMRC have reinstated a full CIS late filing penalty regime. If you file a late CIS return, a £100 fixed penalty will apply. You may also subsequently be charged:
- A second fixed penalty of £200 after two months.
- A tax-geared penalty at six months of a minimum of £300 or 5% of any liability which should have been shown on the return.
- A further tax-geared penalty at 12 months.
- The amount of this penalty will depend on why the return was late.
In situations where a business makes or receives a payment they knew or should have known was connected to fraud, HMRC now have enhanced powers to immediately remove Gross Payment Status (GPS), assess for lost tax and charge a penalty of up to 30%. If GPS has been immediately removed, the time limit for reapplication is increased from one year to five years.
Credit control: the quiet discipline that keeps a business alive
Running a business in recent times has been a lesson in resilience. Costs continue to increase and customers are cautious. Cash is proving tight for many businesses and credit control is a core discipline for keeping a business afloat in such times.
When businesses get into financial trouble, it is often because they have run out of cash and not because they are unprofitable on paper. Credit control sits right at the centre of solving that problem.
When sales are made on credit, cash can often arrive weeks or even months later than expected. VAT, PAYE and suppliers, on the other hand, still need paying on time. A single large customer who pays 30 days late can be enough to put a major strain on a small business.
Effective credit control can help to turn sales into cash in a more predictable way. So, what is involved in credit control?
Agree payment terms and issue invoices promptly
Good credit control begins before the invoice is raised. Having clear payment terms that are agreed with the customer before work starts helps set expectations on both sides.
Try to avoid any delays in sending invoices out. For instance, if invoices are due when work reaches a certain stage, ensure that you are keeping track of the work done and send the invoice as soon as the trigger point is passed. The earlier you can send an invoice, the earlier you stand to receive payment.
Enforce your payment terms
Having agreed your payment terms, you then need to enforce them. If customers are routinely allowed to drift beyond your stated terms, you are telling them that your deadlines are flexible.
For instance, if you include a 14-day term on your invoice but only start chasing at 45 days, you may find that most customers do not pay until around the six-week mark. On the other hand, if you follow up politely the day after the 14 days have passed, the difference in cash flow can be dramatic.
It can feel awkward to chase payment, and you may be concerned it will damage your relationship with your customer. However, most well-run businesses expect to be chased if they miss a due date. Clear communication and timely reminders show that you run an organised business.
Keeping your tone consistent and professional helps normalise the process and makes it clear that payment is simply part of how you do business, not a personal criticism of the customer.
Spot problems early
Good credit control can help you spot problems early. When a reliable customer starts to delay payment, that’s usually because something has changed. Sometimes it is simply an administrative adjustment, but it can also be the first sign that they are experiencing some financial difficulty.
If you catch that early, you may have some options. For instance, you may be able to tighten credit terms, request payment upfront, or pause work before you are out of pocket.
You may be surprised at how helpful it can be to regularly review your aged-debtor report.
Make it a routine part of your business
On that subject, the most effective credit control systems are regular and documented. Make credit control a regular part of the week, rather than something only considered once non-payment has become a problem.
A weekly review of outstanding invoices and use of standard reminder emails takes the emotion out of things. Your accounting software may be able to automate some parts of the process for you.
Conclusion
Businesses that take credit control seriously are less likely to face sudden cash crises.
It is not about mistrusting customers, but rather helping ensure that the value you create for your customers is turned into cash in a timely and reliable way. Credit control can be the difference between growth and constant firefighting.
State Pension amounts increase…
But so does the State Pension age
April marked a 4.8% rise in both the basic and new State Pensions. This could mean an additional £575 annually for many pensioners.
The Pension Credit has also increased by 4.8% and is worth an average of £4,300 a year.
The full rate of the new State Pension increases from £230.25 to £241.30 a week. The full basic State Pension increases from £176.45 to £184.90 a week.
The Standard Minimum Guarantee in Pension Credit is now £238.00 per week for a single pensioner, and £363.25 for a couple.
The increases, which are part of the government’s Triple Lock Guarantee, apply automatically. If you receive the State Pension, you should notice the increase in your next payment.
State Pension age starts rising to 67
The current State Pension age is 66, but beginning April 2026, it will start to rise.
The rise will happen gradually. First, those born between 6 April and 5 May 1960 will have to wait an extra month before they start to receive any State Pension. Those born between 6 May and 5 June 1960 will have to wait an extra two months.
By next April, the State Pension age will have risen to 67.
The change aims to reflect longer life expectancy and may signal future pension age rises, with many now expecting to have to work into their 70s.
Are you ready for E-invoicing?
Policy in development
HM Revenue & Customs (HMRC) recently released a research paper on how small and medium-sized businesses (SMEs) view electronic invoicing, also called e-invoicing.
In the Autumn Budget 2025, plans were announced to make e-invoicing mandatory for VAT invoices from 2029. In preparation for this change, the research paper was designed to help deliver an e-invoicing policy that will suit the competitive needs of SME businesses.
An e-invoice is an invoice that is sent and received in a structured digital format and is suitable for automatic electronic processing. E-invoicing systems can integrate with accounting systems, making it easier to manage a business’s bookkeeping.
The government believes that e-invoicing will assist businesses in submitting more accurate tax returns.
The research indicates that 59% of businesses are familiar with what e-invoicing is. However, only 29% of businesses appear to be currently using it, and only 10% of SMEs report both sending and receiving e-invoices.
The most common method used by SMEs both for sending and receiving invoices was reported to be PDF or email. Many businesses are also still using paper and physical mail for invoicing.
With a change to e-invoicing not becoming mandatory until 2029, there is still plenty of time to prepare. If you would like help exploring whether your accounting system can handle e-invoicing, please give us a call.
The information provided within our E-Newsletters are general in nature to raise awareness of certain issues that may affect our clients. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from a professional advisor before you take any action or refrain from action.
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The information can only provide an overview of the regulations and matters for consideration in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.