Tax, CIS and Making Tax Digital for self-employed builders

When Making Tax Digital starts for builders

It depends on your qualifying income, not your trade. Qualifying income is the total of self-employment and property income before expenses (turnover), not profit.

Once you’re in, you send HMRC a quarterly update by 7 August, 7 November, 7 February and 7 May, then a tax return after the year ends. MTD for Income Tax does not change how tax is paid or the payment due dates.

Check your own start date and what to sort first. It’s free and takes a minute.

CIS for builders

CIS covers building, altering, repairing, extending and demolishing buildings, on new and existing property, plus the work that prepares or finishes it, such as site clearance, foundations, drives and cleaning on completion. Once you pay another trade for construction work, you are a CIS contractor too. You must register as one before your first payment, check new subcontractors with HMRC, deduct from their labour, pay it over and file monthly returns. Delivering materials, carting spoil away and hiring out kit without an operator are outside the scheme.

When CIS applies, a contractor deducts 20% if you’re registered for CIS, 30% if you’re not, and nothing if you have gross payment status. To work out a CIS deduction, the contractor starts with the gross invoice and takes away what the subcontractor paid for VAT, consumable stores, fuel (except for travelling), plant hire, manufacturing or prefabricating materials, and materials; the CIS rate is then deducted from the amount left.

Before you join Making Tax Digital, over-deducted CIS is claimed back through your Self Assessment tax return. Once you are in Making Tax Digital, HMRC adds your CIS deductions to your tax return, and any refund is requested separately through HMRC online services. Either way, the sooner after 5 April the return is filed, the sooner HMRC can repay you.

Estimate your CIS refund

Free, and it runs in your browser: add your van or mileage, tools and phone, for 2025-26 and 2026-27.

Costs builders usually claim

The test for every cost is whether it was for your business. If something is partly personal, only the business part counts.

Your van, tools and kit

Builders tend to hire more than they own: diggers, mixers, scaffolding and skips come in for a job and go back after. Hire is a running cost; plant you buy is equipment. On your own CIS invoices, plant hired from someone else can be shown with materials, so it is left out of the deduction, but plant you own cannot. A jobbing builder moving between temporary sites can usually claim travel from home, and HMRC’s manual uses the builder as its example. A trip from home to a yard you work from is commuting.

From 2024-25 the cash basis is the default for sole traders and partnerships without corporate partners, with no turnover limit; traditional (accruals) accounting is an opt-out. Under the cash basis, the cost of equipment bought to keep and use in the business, such as machinery, computers and vans, is claimed as a normal allowable expense rather than a capital allowance. Cars are different: they go through capital allowances.

Simplified expenses for cars and goods vehicles (vans) from 6 April 2026: 55p a mile for the first 10,000 business miles, then 25p; motorcycles 24p. Once used for a vehicle you must keep using it for that vehicle, and it cannot be used for a vehicle already claimed through capital allowances.