Autumn Budget 2026: What It Could Mean for CIS Contractors and Recruitment Agencies

Chancellor John Healey will deliver the Autumn Budget on 28 October 2026, the first of the Burnham government. If you work in construction labour supply, or you place contractors through an agency, it's worth knowing what to expect.

Nothing specific to the Construction Industry Scheme (CIS) has been confirmed yet. So this post separates what is already in force, what is likely, and what the industry is lobbying for.

The backdrop: a Chancellor with limited room

Rises to income tax, employee National Insurance and VAT rates have been ruled out, but the fiscal headroom left over from the last Budget is uncertain. Estimates range from as little as £5 billion to around £10 billion, and most commentators expect tax rises alongside spending control.

When money is tight, HMRC's compliance agenda tends to get attention, because it raises revenue without touching headline tax rates. The last Budget's umbrella company measure was expected to bring in an extra £895m in 2026/27. Labour supply chains have clearly been a target, and we'd be surprised if this Budget ignored them entirely.

What has already changed

Many of the big shifts took effect in April 2026, so the Budget will build on them.

Umbrella company liability. Joint and several liability for umbrella PAYE arrived on 6 April 2026. Agencies and, in some cases, end clients can now be pursued for unpaid tax in their supply chain.

CIS reforms. From the same date:

• Mainstream contractors must submit a monthly CIS return, even a nil one, unless they've pre-notified HMRC of an inactivity period.
• Where a business makes or receives a payment it knew, or should have known, was connected to fraud, HMRC can withdraw Gross Payment Status with immediate effect, and it can also charge penalties of up to 30%. A business that loses GPS for fraud or serious non-compliance is barred from reapplying for five years.
• HMRC has also set out the due diligence checks it expects, which adds to the administrative burden.

The direction of travel is clear: it's no longer enough to be compliant yourself. You're expected to know your supply chain is too.

What the Budget could bring

1. A tougher line on avoidance models. The FCSA has published its asks for the Chancellor. It wants a ban on the Elective Deduction Model, and it flags CIS deductions being applied to workers who are plainly under supervision, direction or control and should be on PAYE. It also highlights newer workarounds that have appeared in response to the April rules, including restructuring a paying entity so it can argue it isn't an umbrella company, and pushing workers into personal service companies that aren't genuine. It is also calling for reform of the Managed Service Company rules and a statutory employment status test. None of this is confirmed, but these are the areas where reform is most plausible.

2. IR35 pressure, but probably not repeal. Advisers are asking for an "IR35 reset", partly because many engagers have defaulted to blanket Inside IR35 decisions. But calls for reform at the 2025 Budget didn't lead to any repeal, and we'd expect more of the same. Plan for the current rules to stay.

3. Frozen thresholds and take-home pay. The income tax band freeze was extended until 2030/31 at the last Budget, so fiscal drag continues to bite. For CIS subcontractors, deductions of 20% or 30% are treated as advance payments of tax and National Insurance, so a tighter squeeze on take-home pay makes correct deduction rates and timely refunds even more important.

4. A possible boost for construction demand. The Telegraph has reported that the Chancellor plans to borrow up to £9bn for infrastructure, housing development and business incentives. If that materialises, demand for construction labour could rise, and so could pressure on supply chains to onboard workers quickly. That's exactly when corners get cut.

What this means for recruitment agencies

With liability now sitting closer to the agency, the risk in your supply chain is yours. Any new Budget measure is likely to extend that principle, not reverse it. Sensible steps now:

• Audit your payroll and umbrella providers. Check they hold independent accreditation, such as FCSA or Workforce Assured, and that their PAYE and CIS processes stand up to scrutiny. veriPAYE-style verification of payroll data gives you evidence, not just assurances.
• Question your CIS/PAYE status decisions. If a worker is under supervision, direction or control, CIS is probably the wrong route. Get this right at onboarding.
• Document your due diligence. Under the "knew or should have known" test, a paper trail matters.
• Review preferred supplier list (PSL) requirements. Expect end clients to ask tougher compliance questions of their agencies, and be ready to answer them.

What this means for CIS contractors

• Check your registration and GPS status. Losing GPS has become a serious consequence, so make sure your returns are on time and accurate.
• Know your employment status. If your working arrangements look like employment, expect more scrutiny of CIS deductions.
• Be wary of "too good to be true" take-home offers. Schemes that promise higher net pay often rely on the very models regulators are targeting.
• Keep records of your deductions. You'll need them for your tax return and any refund claim.

What to do before 28 October

You can't change what the Chancellor announces, but you can be ready for it. Review your supply chain, check your providers' credentials, and tidy up your status decisions now, rather than after the Budget.

We'll publish a follow-up once the announcements are out, covering exactly what changed and what to do about it.

Need a compliant payroll or CIS partner ahead of the Budget? Get in touch with us to talk through your supply chain.

*This article is for general information and isn't tax or legal advice. Details may change following the Budget announcement.

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