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ARTICLE · 05 MAY 2026

CIS Guidance Update: A Cautionary Tale On How Small Changes Can Make A Big Difference To Those Involved With Development Loans

Lewis Silkin
Lewis Silkin
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Lewis Silkin

Lewis Silkin

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HMRC has updated its internal guidance to clarify that pure financing arrangements fall outside the Construction Industry Scheme (CIS), but significant uncertainty remains for lenders and investors who maintain control over development projects.

United KingdomTax
Emma McGrory
Emma McGrory
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Leah Glover
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Rachel Worrall
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What has happened?

On 5 May 2026, HMRC changed its internal guidance to state that the construction industry scheme (the "CIS") may apply where a contract "funds construction operations", even if the party providing the funds is not itself a construction business. Until now, it has been widely accepted that conventional development finance arrangements (namely, those that did not contain elements where a lender would get a stake in the development being funded) fell outside the CIS.

Seemingly following industry input HMRC has now further updated its internal guidance to note that "Pure financing arrangements (including lending, providing finance and grant funding) fall outside the scope of CIS".

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