Tax, CIS and Making Tax Digital for self-employed HVAC engineers

When Making Tax Digital starts for HVAC engineers

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 HVAC engineers

CIS covers installing systems of heating, ventilation and air conditioning in a building, and HMRC says a complete air conditioning installation is within the scheme. Repairing, servicing, maintaining, altering or extending a system is outside, and so is replacing parts, such as a burned-out fan motor. Built-in refrigeration such as a cold store, and building environmental controls, are covered when they finish building work. A contract that mixes service work with an installation or other building work brings every payment under it into CIS.

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 HVAC engineers 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

Most HVAC engineers drive between customers’ buildings in a van carrying gauges, a vacuum pump, a recovery machine and refrigerant, so trips to each site are usually business travel. A long install at one site, day after day, can start to look like commuting, so keep a note of where you worked. Tools, test kit and the van are business equipment. F gas rules add a cost of their own: each engineer needs their own qualification, even when working for someone else, and the business needs certification to work on other people’s systems.

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.