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Before. As of October 2026, HMRC says a subcontractor's turnover is the full pay before Construction Industry Scheme (CIS) deductions. That gross figure, not what reaches your bank, is tested against the Making Tax Digital and VAT thresholds.
The deduction a contractor takes is tax paid on your behalf, not money you never earned. This page follows HMRC's notes for the self-employment pages of the 2025-26 tax return, GOV.UK's CIS, Making Tax Digital and VAT guidance, and HMRC's CIS manual, all checked on 17 October 2026.
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What goes in the turnover box
GOV.UK tells sole-trader subcontractors to record their total pay before deductions as income, and the total deductions as CIS deductions. HMRC's notes for the 2025-26 short self-employment pages (SA103S) are more specific. Box 9, "Your turnover", is everything your business received or earned before taking off any expenses. If you are a subcontractor, it must include the full amount before any CIS deductions. Box 38 then holds the total deductions from your contractors' statements, and the notes ask you to check box 9 is gross whenever box 38 has a figure in it.
Two things follow. The CIS deduction is never an expense, because it is tax you have already paid. And materials you buy and charge on to a contractor are part of your turnover too, then claimed as an expense.
Three thresholds, three versions of turnover
Your gross pay feeds three tests. They do not all treat materials the same way.
| Test | Threshold | Before or after CIS deductions? | Materials you charge for |
|---|---|---|---|
| Making Tax Digital qualifying income | Over £30,000 in 2025-26 means you start on 6 April 2027; over £20,000 in 2026-27 means 6 April 2028 | Before | Included: it is income before expenses |
| VAT registration | Over £90,000 of taxable turnover in any rolling 12 months | Before | Included: it is the value of what you sell |
| Gross payment status turnover test | At least £30,000 for a sole trader in the 12 months before you apply | Before | Taken off, along with VAT |
The gross payment status test is the odd one out. HMRC's manual works out net construction turnover as gross construction turnover less related materials: building materials and consumables, fuel for plant, plant hire and any Construction Industry Training Board levy. Fuel for travelling and subsistence are not materials, so they stay in. The gross payment status guide covers the other two tests.
There is a fourth line at £90,000. If turnover from your self-employment is under £90,000, Making Tax Digital lets you record each item as just income or expense, and HMRC's notes let you use the short self-employment pages. Both use the same gross turnover.
A worked example
Take a hypothetical sole trader who is not VAT registered. In 2025-26 they invoice contractors £26,000 for labour and £6,000 for materials they bought themselves. Contractors take CIS at 20% from the labour only, because GOV.UK says no deduction is taken from materials you paid for directly.
| Figure | Amount | Result |
|---|---|---|
| Paid into the bank | £26,800 | Not used for any test |
| CIS deducted (20% of £26,000) | £5,200 | Credited on the tax return |
| Turnover on the tax return | £32,000 | Labour plus materials, before deductions |
| Making Tax Digital qualifying income | £32,000 | Over £30,000: starts 6 April 2027 |
| VAT taxable turnover | £32,000 | Under £90,000: no need to register |
| Gross payment status net turnover | £26,000 | £32,000 less £6,000 materials: under £30,000 |
Looking only at the bank, this trader might think they are under £30,000 for everything. In fact they are over the Making Tax Digital line and under the gross payment status line, at the same time. The gross payment status test uses the 12 months before the date you apply, so this example assumes those 12 months match the tax year.
What this means for you
Never work out a threshold from bank statements alone. For labour-only work at 20%, if you are not VAT registered, the bank shows 80% of your turnover, so multiply what came in by 1.25 to get back to gross. At 30%, divide by 0.7. If you also supply materials, add up your invoices instead.
Making Tax Digital looks at your tax return, so the box 9 figure is what HMRC will test. VAT is different: it looks at your taxable turnover for the last 12 months at any point, not the tax year, and GOV.UK says you must register within 30 days of the end of the month you went over £90,000. More on that in do I need to register for VAT.
Steps to work out your turnover
- Gather every monthly payment and deduction statement for the tax year. Ask a contractor for a replacement if one is missing.
- Add up the gross payments, before CIS deductions. Add any work for householders or other customers outside CIS.
- Compare the total with £30,000 for 2025-26, or £20,000 for 2026-27, to see when Making Tax Digital starts. The free MTD check does this for you.
- Keep a running 12-month total of your sales, excluding VAT, against the £90,000 VAT threshold.
- If you are thinking about gross payment status, take the materials, plant hire and plant fuel you paid for off the last 12 months' construction turnover and compare it with £30,000.
- On your tax return, put the gross figure in turnover and the total deductions in the CIS box.
How CIS and MTD fit together is covered in does Making Tax Digital apply to CIS subcontractors, and the trades section has more guides on CIS.
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Questions people ask
Do I put my gross or net CIS pay on my tax return?
Gross. HMRC's notes for the self-employment pages say to include the full amount before CIS deductions in your turnover. The total deductions go in a separate box, so HMRC can take them off your bill.
Are CIS deductions a business expense?
No. GOV.UK calls them advance payments towards your tax and National Insurance. They are credited against your bill on your tax return, not taken off your income as a cost.
Does turnover include the materials I charge a contractor for?
Yes for your tax return, Making Tax Digital and VAT, because those use income before expenses. No for the gross payment status turnover test, which takes related materials off before comparing with £30,000.
Do I use gross pay for the VAT threshold?
Yes. GOV.UK defines taxable turnover as the total value of everything you sell that is not exempt or out of scope. Work from your invoices, not the smaller amount paid into your bank after CIS.
How do I find my gross pay if I only have bank statements?
Use your monthly payment and deduction statements, which show what each contractor paid and deducted. Contractors must give you one within 14 days of the end of each tax month, and you can ask for a replacement if you lost one.
Sources
- Self Assessment: self-employment (short) (SA103S), with the 2026 notes (GOV.UK)
- What you must do as a CIS subcontractor: Pay tax and claim back deductions (GOV.UK)
- What you must do as a CIS subcontractor: Get paid (GOV.UK)
- Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK)
- Find out if and when you need to use Making Tax Digital for Income Tax (GOV.UK)
- Use Making Tax Digital for Income Tax: Create digital records (GOV.UK)
- Expenses if you're self-employed (GOV.UK)
- Register for VAT: When to register for VAT (GOV.UK)
- What you must do as a CIS subcontractor: How to get gross payment status (GOV.UK)
- CISR44130: Turnover test, net turnover explained (HMRC manual)
This is general information to help you understand the rules. It isn't tailored to your circumstances, so check your own position before acting on it.
Righto Tax is a trading name of NJG Consultancy Ltd, registered in England and Wales, company number 16095900. Registered office: Jubilee House, East Beach, Lytham St Annes, FY8 5FT.
All CIS guides for subcontractors
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