Making Tax Digital for CIS subcontractors: a plain-English guide for tradespeople

Checked against current HMRC guidance on 11 November 2026.

If you’re a self-employed plumber, electrician, bricklayer, roofer, joiner or labourer working under the Construction Industry Scheme (CIS), Making Tax Digital for Income Tax is coming for you sooner than your bank balance suggests. This guide explains why, what changes, and a simple monthly routine that keeps the quarterly updates painless.

The short answer

MTD is based on what you invoice, before the CIS deduction. If you invoiced more than £30,000 in the 2025 to 2026 tax year from self-employment (plus any rental income), you’ll need to use MTD from 6 April 2027, even if less than £30,000 landed in your account after the 20% was taken off.

CIS itself doesn’t change. Contractors still deduct tax and send it to HMRC. What changes is how you keep records and report to HMRC.

Why it’s the gross figure

MTD uses your qualifying income: your gross income from self-employment and property before expenses. A CIS deduction isn’t an expense. It’s Income Tax and National Insurance paid in advance on your behalf. So HMRC looks at the full value of the work.

You invoiced (labour)	CIS deducted at 20%	Reached your bank	Qualifying income	MTD from April 2027?
£28,000	£5,600	£22,400	£28,000	No (check again for 2028)
£33,000	£6,600	£26,400	£33,000	Yes
£45,000	£9,000	£36,000	£45,000	Yes

The same goes if you have gross payment status and nothing is deducted, or if you’re unregistered and 30% is taken. The test is on what you earned, not what you were paid after tax.

Materials count too

If you supply materials and charge for them, that charge is part of your turnover. Contractors don’t deduct CIS from the materials part of an invoice, but it still counts towards your qualifying income. Subbies who buy a lot of materials can be well over the threshold without realising.

Direct work for homeowners counts as well

Plenty of tradespeople mix CIS work for main contractors with private jobs for homeowners. It all adds up. Your qualifying income is the total of both, plus any rental income.

What changes for a CIS subcontractor

1. Digital records. Your income and expenses go into HMRC-recognised software as the year goes on. Record each invoice at its gross value and the CIS deduction separately.
2. Quarterly updates. Four times a year, your software sends HMRC a summary of your income and expenses so far. The standard deadlines are 7 August, 7 November, 7 February and 7 May.
3. End-of-year tax return from your software. This is where your CIS deductions are set against your tax bill. Any refund still comes after you file the end-of-year return. Quarterly updates don’t trigger refunds.

If you joined from April 2027, Budget 2026 confirmed you won’t get penalty points for late quarterly updates in your first year (2027 to 2028). They’re still required, though, and you can’t file your end-of-year return until all four are in.

A 15-minute monthly routine

The subbies who find MTD painful are the ones who leave everything to the week before a deadline. This is the routine I’d set up:

1. Invoice at the gross amount. Show labour and materials separately on your invoices if you supply materials.
2. Save every payment and deduction statement. Contractors must give you one within 14 days of the end of each tax month (tax months end on the 5th). Photograph or download it and attach it in your software that day.
3. Match payments to invoices. When money arrives, mark the invoice paid and record the CIS amount deducted.
4. Snap receipts as you go. Materials, fuel, tools, workwear, phone. Most apps let you photograph a receipt and file it in seconds.
5. Check the CIS total. Once a month, compare the CIS deducted in your software with your statements. Chase any contractor whose statement is missing.

Do that and each quarterly update is a five-minute check and a button press.

Choosing software as a subcontractor

Any product you use must be on HMRC’s list of recognised MTD for Income Tax software. For CIS, the extra thing to check is that it can record the gross amount and the CIS deduction separately, and carry those deductions through to your end-of-year return.

Several products say they’re built for this. Coconut and Clear Books both advertise CIS deduction tracking, and QuickBooks’ own community advice is that its older Self-Employed product doesn’t handle CIS natively. I haven’t tested these myself yet, so treat this as a starting point, not a recommendation. Use HMRC’s software finder and filter for what you need.

If you’re also a contractor

If you pay other subcontractors, you still file your monthly CIS returns as a contractor. MTD doesn’t replace them. Your qualifying income is still based on what you invoice your own customers.

Common questions

Will MTD change how much CIS is deducted?

No. Deduction rates (20% registered, 30% unregistered, 0% with gross payment status) are set by CIS, not MTD.

Will I get my CIS refund faster under MTD?

Not because of MTD itself. Refunds still come after your end-of-year return. Keeping your records up to date through the year means you can file earlier, which can mean getting a refund sooner.

I’m a limited company subcontractor. Does this apply?

No. MTD for Income Tax is for sole traders and landlords. Limited companies pay Corporation Tax, and MTD for Corporation Tax isn’t currently planned.

Can my accountant still do everything?

Yes. An accountant or bookkeeper can sign you up as your agent and send the updates. You’ll still need to get your invoices, statements and receipts to them in a digital form.

Sources: HMRC, Work out your qualifying income for Making Tax Digital for Income Tax; What is the Construction Industry Scheme; Find software that works with Making Tax Digital for Income Tax. Examples are simplified. This is general information, not tax advice.