Do I Need MTD If I'm a CIS Subcontractor?

Do CIS subcontractors have to do MTD?

Yes. HMRC's exemptions list has no entry for CIS, so a subcontractor whose only income is CIS work is treated like any other sole trader. You join if your qualifying income (self-employment plus property turnover) is over £30,000 in 2025-26 (from April 2027) or over £20,000 in 2026-27 (from April 2028). The full rollout is explained in the MTD £30,000 threshold guide.

Qualifying income is taken before any deductions, and HMRC's CIS guidance tells subcontractors to record "total pay before deductions" as income (GOV.UK: CIS subcontractors, GOV.UK: qualifying income). So the gross figure counts.

Worked example: £32,000 gross, £25,600 in the bank

Kieran is a dryliner working for two main contractors under CIS.

If Kieran went by his bank statements he'd think he was under £30,000. He isn't. His van, tools and materials don't reduce the figure either: it's turnover, not profit. And with the £20,000 threshold arriving in April 2028 (decided on 2026-27 pay), a subcontractor on similar money would be in a year later even on the net figure.

What happens to my CIS deductions inside MTD?

Your quarterly updates show gross income and expenses only. CIS deductions don't go in them. HMRC uses the deductions your contractors report in its tax estimate and pre-fills them in your tax return (previously called the final declaration), due 31 January. Any refund comes once a year with that return; in-year refunds are only possible if you stop trading (GOV.UK: submit your tax return).

For the full picture of how CIS works inside MTD, see MTD for CIS subcontractors. For CIS itself, see the CIS subcontractor guide and the CIS tax guide.

Could I be exempt for another reason?

Possibly, but not because of CIS. You're exempt automatically if you have no National Insurance number. You can apply for a digital exclusion exemption if age, health or disability, a religious objection, or where you live (no internet access) means you can't use software. Cost, or not knowing how to use software, isn't accepted on its own (GOV.UK: exemptions).

What to do next

1. Add up the gross figures on your 2025-26 payment and deduction statements, plus any private work and rent. Over £30,000 means you're in from April 2027.
2. Chase any missing statements now. For each payment you want the gross, the deduction and the net.
3. See roughly what you're owed back with the CIS tax refund estimator.
4. Record gross, deduction and net separately from today. In Sleepless Tradesman, cash and CIS income records, expenses, mileage, a tax set-aside estimate with CIS deductions taken off, and quarterly figures are free on every plan. Your figures are ready to export for you or your accountant to submit. Sending them to HMRC directly from the app is coming once HMRC approves it.

Frequently asked questions