Making Tax Digital for CIS subcontractors: what changes from April 2026

Who needs to join Making Tax Digital?

Making Tax Digital for Income Tax (MTD) applies to sole traders and landlords based on their qualifying income: total turnover from self-employment and property, before expenses. It is being phased in:

• From 6 April 2026 if qualifying income is over £50,000 (based on your 2024/25 tax return).
• From 6 April 2027 if it is over £30,000.
• From 6 April 2028 if it is over £20,000.

MTD applies to individuals. If you trade through a limited company, it does not apply to the company, although it may apply to you personally if you also have rental income.

Gross CIS income counts

For CIS subcontractors, the figure that matters is your gross income before the 20% deduction. A subcontractor invoicing £55,000 who receives £44,000 after CIS deductions is over the £50,000 threshold and is already in MTD.

What you must do

You need MTD-compatible software to keep digital records of income and expenses, send a summary to HMRC every quarter, and make a final declaration by 31 January after the tax year. The final declaration replaces the old Self Assessment return for that income.

How CIS deductions are reclaimed

Quarterly updates are summaries of income and expenses. They are not tax returns, and you do not pay tax with them. Your CIS deductions are set against your tax bill in the final declaration, just as they are now. If too much has been deducted, HMRC refunds the difference. Keeping digital records also makes it far easier to match your payment and deduction statements every month.

Penalties

MTD uses a points-based system for late submissions. Each late quarterly update earns a point, and a £200 penalty is charged once you reach the threshold. Late payment penalties are charged separately.

Our MTD Essentials plan is £25 a month and MTD Complete is £75 a month, both including VAT. See how our MTD service works.