Making Tax Digital: Information for CIS workers

From April 2026, a major change is coming to how self-employed workers report their income to HMRC. If you’re CIS subcontractor, it’s important to understand what’s changing, how it affects you and what you need to do now to prepare.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system. Its aim is to make tax reporting more accurate, efficient and easier to manage by requiring individuals and businesses to keep digital records and submit updates to HMRC using compatible software.

MTD has already been introduced for VAT-registered businesses. From April 2026, it will be extended to self-employed individuals and landlords earning over £50,000 per year – including many CIS subcontractors.

Further phases are planned:

• April 2027: Threshold reduces to £30,000
• Future phases are expected to include even lower income levels

How MTD impacts CIS workers

If you work under the Construction Industry Scheme (CIS), you’re likely used to submitting one Self Assessment tax return per year.

Under MTD, this will change significantly:

• You’ll need to keep digital records of your income and expenses
• You’ll submit quarterly updates to HMRC
• You’ll complete a final declaration at the end of the tax year

While CIS deductions will still be made at source (typically 20% or 30%), you’ll now be responsible for more frequent reporting of your earnings throughout the year.

In short, tax becomes a year-round process, rather than a once-a-year task.

What do you need to do?

If you currently complete a Self Assessment tax return, you’ll need to transition to a more digital, structured approach.

1. Move to digital record keeping

You’ll need to use MTD-compatible software (such as FreeAgent or similar platforms) to:

• Record income and expenses
• Track CIS deductions
• Submit updates directly to HMRC

2. Submit quarterly updates

Instead of one annual return, you’ll send four updates per year, summarising your income and expenses.

3. Complete a final declaration

At the end of the tax year, you’ll still need to:

• Confirm your total income
• Make any adjustments
• Finalise your tax position

Is there an upside?

While MTD introduces more frequent reporting, it does bring several benefits:

Better visibility of your finances

You’ll have a clearer, real-time view of:

• Your income
• Tax owed
• Cash flow

Fewer surprises at tax time

Quarterly reporting helps spread the workload and reduces the risk of a large, unexpected tax bill.

Improved accuracy

Digital records reduce manual errors and help ensure:

• CIS deductions are correctly tracked
• Expenses are properly recorded

Easier financial planning

With up-to-date information, you can make better decisions about:

• Saving for tax
• Managing business costs
• Planning ahead

Penalties Under MTD

MTD introduces a new points-based penalty system for late submissions.

• Each missed deadline = 1 penalty point
• Points accumulate until a threshold is reached
• Once the threshold is hit, a financial penalty applies

You’ll also face penalties for:

• Late payment of tax
• Failure to keep digital records

The key takeaway: consistency matters — staying on top of deadlines will help you avoid unnecessary costs.

Key Deadlines 

Here’s what the reporting schedule will look like under MTD:

Period Covered	Submission Deadline
6 April – 5 July	7 August
6 April – 5 October	7 November
6 April – 5 January	7 February
6 April – 5 April	7 May
Final Declaration	31 January (following tax year)

This means you’ll be interacting with HMRC at least five times per year, rather than once.

Checklist – Getting ready for MTD

If you’re a CIS subcontractor, here’s a simple 4-step plan:

1. Check your income threshold

If you earn over £50,000, you’ll be included from April 2026.

2. Switch to digital bookkeeping

Choose MTD-ready software that can:

• Handle CIS deductions
• Submit updates automatically

3. Start now

Begin keeping digital records ahead of time so you’re comfortable before it becomes mandatory.

4. Get expert help

Speak to professionals who understand both CIS and MTD to ensure you’re fully compliant and set up correctly.

Final Thoughts

Making Tax Digital represents a significant shift in how CIS subcontractors manage their tax affairs. While it may feel like an added administrative burden at first, it ultimately brings greater transparency, accuracy and control over your finances.

The key is to be prepared.

By switching to digital tools, getting familiar with quarterly reporting and seeking the right support, you can stay compliant — and even benefit from a clearer, more organised approach to your finances.