Does Making Tax Digital apply to CIS subcontractors?

Yes, if you are a self-employed sole trader. Making Tax Digital starts on 6 April 2027 if your 2025-26 income before CIS deductions and costs was over £30,000, or 6 April 2028 if 2026-27's is over £20,000.

Making Tax Digital for Income Tax (MTD) means keeping digital records, sending HMRC a quarterly update and filing your tax return through software. The Construction Industry Scheme (CIS) does not take you out of it. If anything, CIS makes it easier to cross the line without noticing, because the money in your bank is smaller than the figure HMRC counts.

The figure that counts

GOV.UK says qualifying income is your total self-employment and property income before expenses, also called turnover. For CIS subcontractors, GOV.UK's CIS guidance says to record your total pay before deductions as income. So the test uses your gross pay, before the 20% or 30% is taken and before your costs. The turnover guide shows how gross pay also feeds the VAT test, and why the gross payment status test takes materials off first.

Wages from a job, dividends and pensions do not count. Rent from a property does, so a subcontractor with a buy-to-let adds both together.

How CIS works inside MTD

Digital records. Record each payment at its gross amount as income. Materials, tools, van costs and other business costs are recorded as expenses. The CIS deduction itself is not an expense: it is tax already paid. If your turnover is under £90,000, each item only needs to be marked as income or expense.

Quarterly updates. These are running totals of income and costs for the tax year so far, due by 7 August, 7 November, 7 February and 7 May. They are reports, not payments, and they do not trigger a CIS refund.

Tax return. GOV.UK says HMRC adds your CIS subcontractor deductions to your MTD tax return, along with other information it holds. You must check them before you submit, and correct anything wrong in your software. Keep your monthly payment and deduction statements so you can.

Refunds. GOV.UK says you cannot claim a refund in an MTD tax return. If you are due one, you request it through your HMRC online services account, or your agent requests it through theirs.

What this means for you

If your 2025-26 gross CIS pay and any other self-employed or rental income came to more than £30,000, you start on 6 April 2027. Your first quarterly update is due by 7 August 2027. Your 2025-26 return, due by 31 January 2027, is the one HMRC uses to decide, and it is still an ordinary Self Assessment return.

Penalties work on points, and at 4 points HMRC charges £200. The 2026-27 relief from points for missed quarterly updates covers that year. At the Budget on 28 October 2026 the government said people who must join in April 2027 will get no penalty points for late 2027-28 quarterly updates either, though the updates must still be sent. For them, the earliest a late update can earn a point is 7 August 2028.

The CIS refund timing does not change. Over-deducted CIS is claimed back after the tax year ends. The sooner after 5 April you file, the sooner HMRC can repay you.

Steps to get ready

1. Add up your 2025-26 gross CIS pay from your statements, plus any other self-employed turnover and rent.
2. If the total is over £30,000, you start on 6 April 2027. Use the free MTD check to confirm.
3. File your 2025-26 tax return early, so you know your figure and any refund is not left waiting.
4. Choose MTD software, or a service that uses it, that records gross pay and CIS deductions separately. Our Making Tax Digital software census shows how many products on GOV.UK's finder say they are ready for CIS now.
5. Sign up for MTD before your first quarter, and keep your payment and deduction statements each month.
6. After the year ends, check the CIS deductions HMRC adds to your tax return against your statements, submit, and request any refund online.

The trades section has more guides on CIS and MTD for the building trades.