MTD for CIS Subcontractors: What Subbies Need to Know for 2026
How Making Tax Digital for Income Tax affects CIS subcontractors (subbies). When you're in scope, what quarterly updates involve, and how your CIS deductions fit into your tax bill.
The short answer
If you're a self-employed CIS subcontractor with gross income over £50,000, MTD for Income Tax applies to you from 6 April 2026. You'll keep digital records and send HMRC a quarterly update for your self-employment, then a final declaration. The CIS tax your contractor already deducts (usually 20%) still counts toward your final bill — you report your income and expenses, and the deductions are set against the tax due.
If you work in construction and get paid under the Construction Industry Scheme (CIS), Making Tax Digital (MTD) for Income Tax is the biggest change to how you file since self assessment went online. This guide explains — in plain English — what changes for subcontractors (subbies), what stays the same, and where your CIS deductions fit in.
Are you in scope for MTD?
MTD for Income Tax is mandatory from 6 April 2026 if you are self-employed and/or a landlord with gross qualifying income over £50,000, based on your 2024/25 tax return. "Gross" means your income before any CIS tax is taken off and before expenses — so it's your total turnover, not what lands in your bank.
The threshold then drops:
| From | Qualifying income threshold |
|---|---|
| 6 April 2026 | over £50,000 |
| 6 April 2027 | over £30,000 |
| 6 April 2028 | over £20,000 |
Most full-time subcontractors turn over more than £30,000, so even if you're not caught in the first wave, you very likely will be by 2027.
Being paid under CIS doesn't change whether MTD applies
A common myth is that because your contractor already deducts tax, you're somehow outside MTD. That's not right. CIS is a deduction scheme, not a filing method. You're still a self-employed sole trader for tax purposes, you still complete a self assessment (now via MTD), and the CIS deductions are simply payments on account of the tax you'll owe.
What you'll actually have to do
Under MTD you'll:
- Keep digital records of your income and expenses — no more shoebox of receipts totted up once a year.
- Send a quarterly update every three months, summarising your self-employment income and expenses for that period.
- Finalise the year with a final declaration (which replaces the old SA100 self assessment return) after 5 April.
The quarterly updates
There are four standard quarters in the tax year:
| Quarter | Period | Filing deadline |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
Each update is a running (cumulative) summary of your turnover and expenses. You're not calculating tax each quarter and you're not entering CIS deductions here — you're just reporting what you invoiced and what you spent.
Where do CIS deductions fit in?
This is the part that trips subbies up, so let's be precise.
- Your contractor deducts CIS tax from your labour payments — 20% if you're registered, 30% if you're not, or 0% if you hold gross payment status — and pays it to HMRC monthly.
- The contractor reports those deductions to HMRC. You don't submit them.
- You can view the CIS deductions reported against you so you can check they match your own records.
- At the final declaration, your total income and expenses produce a tax figure, and your CIS deductions are set against that figure. Because 20% is taken off your gross labour before expenses, many subcontractors have overpaid and are due a refund.
In short: you report income and expenses through the year; the CIS you've already had deducted is credited against the final bill.
What good software does for a subbie
The right MTD software should let you:
- Enter or import your income and expenses quickly (many subbies import a spreadsheet from their contractor statements).
- See your CIS deductions pulled from HMRC, so you can reconcile them against your remittance statements before you finalise.
- Submit each quarterly update and your final declaration directly to HMRC.
- Flag when your turnover crosses the VAT threshold (which affects whether you can use simplified "consolidated" expenses).
ThisQuarter does exactly this: it's a secure, encrypted desktop app built for sole traders, landlords and the accountants who file for them — with a dedicated CIS deductions view so construction workers can see how the tax already taken off feeds into the quarterly picture and the final bill.
Key takeaways
- CIS subcontractors are fully in scope for MTD for Income Tax over the £50,000 threshold from April 2026 (£30k in 2027, £20k in 2028).
- You report income and expenses each quarter — not your CIS deductions.
- CIS deductions are credited against your final tax bill; expenses reduce the tax further, which is why refunds are common.
- Use software that surfaces your HMRC-reported CIS deductions so you can check the numbers before you file.
This article is general information, not tax advice. Check your own obligations at gov.uk or speak to your accountant.
Frequently asked questions
Do CIS subcontractors have to use Making Tax Digital?
Yes, if you're a self-employed subcontractor with qualifying income over £50,000 you must follow MTD for Income Tax from 6 April 2026. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028. Being paid under CIS doesn't exempt you — CIS is a deduction scheme, not a separate way of filing.
Do I report CIS deductions in my quarterly update?
No. Your quarterly updates report your income and business expenses. The CIS tax your contractor deducts is reported to HMRC by the contractor each month. You view those deductions and they're set against your final tax bill at the final declaration stage, not entered as income or expense in the quarter.
Will MTD mean I pay more tax as a subbie?
No. MTD changes how and when you report, not how much tax you owe. Your CIS deductions still count in full toward your liability, and you can still claim your allowable expenses. Many subcontractors are due a refund because 20% is deducted before expenses are taken off.
What if my income is under £50,000?
You're outside mandatory MTD for now, but the threshold drops to £30,000 from April 2027 and £20,000 from April 2028, so most full-time subcontractors will be in scope within a couple of years. You can also join voluntarily.
Related reading
How to Check Your CIS Deductions Under MTD for Income Tax
A step-by-step guide to checking the CIS deductions HMRC holds against you as a subcontractor, reconciling them with your contractor statements, and getting them right before your final declaration.
HMRC Self Assessment Number (UTR): What It Is and How to Find It
Your HMRC self assessment number is your Unique Taxpayer Reference (UTR). Here's what it is, where to find it, how to get one, and why you need it for Making Tax Digital and CIS.