Not all the tax changes coming in 2026 are bad news. If your construction company does work for the government, local councils, or public schools, things are actually about to get much easier.
Starting on April 6, 2026, a new rule is coming that will cut down your paperwork and put money into your bank account faster. This new update is called Regulation 24ZA.
What is Regulation 24ZA?
For a long time, the Construction Industry Scheme (CIS) rules have been very confusing when dealing with public money. The new Regulation 24ZA fixes this problem by creating a permanent “public body exemption.”
This means that payments made by certain government groups and local authorities will be completely removed from the CIS rules. You will not have to worry about the normal tax deductions when you get paid by these groups. To see exactly which groups count, you can look at the Finance Act 2004, Section 59.
The Benefits for Contractors
If you build public infrastructure or municipal housing, this new rule is a massive win for your business. Here is how it helps:
- Better Cash Flow: Because these payments are exempt, the public body will no longer hold back 20% or 30% of your money for taxes. You will get paid in full right away.
- Less Paperwork: You will not have to report these specific payments on your monthly CIS returns. This saves your finance team hours of boring admin work.
- Fewer Errors: Taking public jobs out of the complex CIS system means there is less chance for your team to make a reporting mistake.
Keeping Your Projects Clean and Separate
While this exemption is great, it does create a new challenge. If you are a growing contractor making £2 million to £30 million a year, you probably work on both public and private jobs. You must be able to keep the money from your tax-free public jobs completely separate from your normal commercial jobs.
If all your project numbers are mixed together in one giant spreadsheet, your accounting team will have a nightmare trying to sort out what needs to be reported to HMRC and what does not. As Sharon Brown, a Financial Controller in the industry, notes:
"We use Xero to manage the company’s bookkeeping and finances, but it doesn't provide the detailed project information we need to manage our projects effectively."
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Escaping the Spreadsheet Chaos
You do not need a massive, expensive IT system to organise your jobs. The smartest way to handle this new rule is to upgrade to a simple system that sits right on top of Xero or QuickBooks. With the right software, you can set up your public jobs differently from your private jobs from day one. You can get your first project set up and organised in just 1 to 2 hours without slowing down your active sites.
The Danger of Mixing Up Your Invoices
When you do both public jobs and private jobs, you have to be very careful with your math. If you accidentally take tax off a public invoice, you will shortchange your subcontractor and create a giant accounting mess.
On the other hand, if you forget to take tax off a private job, you will owe the tax office money out of your own pocket. Spreadsheets make these accidental mix-ups very easy to make, especially when your team is rushing to get paid at the end of the month. You need a system that knows exactly what rules apply to which project automatically.
Getting Ready Without Stopping Work
Many builders worry that setting up a new digital system to handle these rules will take months and stop work on the site. But you do not need a confusing ERP system to get this right. Because Planyard is built just for construction, it works exactly how your team already works. You can get your first tax-exempt public project set up and running in just 1 to 2 hours.
As Lee Covington, a construction owner, says about ditching his old spreadsheets for Planyard:
"It’s at least a full-time job’s worth of work saved. And it means when I look at the numbers, I know they’re right – nothing’s gone missing."
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You get total accuracy without a massive IT headache.
Managing Exempt Revenue with Planyard
Planyard gives your team the perfect tool to manage these new tax rules. Our construction project manager software allows you to easily categorise your tax-exempt public projects and keep them totally separate from your standard commercial projects.
This means your project managers can run the site, and your finance team automatically gets the clean, separated data they need.
"Everything has a PO linked to a job number. No one does a job without a purchase order, so when I look at margin I know it’s the true margin."
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By organising your projects with Planyard, your accounting software stays perfectly synced, and you can enjoy the cash flow benefits of the new 2026 rules without the stress.