Making Tax Digital for CIS Subcontractors: What Changes in April 2027

Do CIS subcontractors have to do Making Tax Digital?

Yes, if your income is over the threshold. HMRC's list of exemptions does not include CIS subcontractors, and being paid under CIS does not change the test. What decides it is your qualifying income: self-employment plus property turnover, before expenses.

• Over £50,000 on your 2024–25 return: in from 6 April 2026 (already started).
• Over £30,000 on your 2025–26 return: in from 6 April 2027.
• Over £20,000 on your 2026–27 return: in from 6 April 2028.

The 2025–26 return is due by 31 January 2027, so the figures you are about to file decide whether you start in April. For a step-by-step check, see do I need MTD if I'm a CIS subcontractor?, the £30,000 threshold guide, or put your figures into the free Making Tax Digital checker.

Source: Find out if and when you need to use Making Tax Digital for Income Tax (GOV.UK)

Source: Find out if you can get an exemption from Making Tax Digital for Income Tax (GOV.UK)

Gross, deduction, net: which CIS number counts?

Every CIS payment has three numbers, and mixing them up is the most common mistake subcontractors make with MTD:

HMRC's rules count qualifying income "before any deductions", and its CIS guidance tells subcontractors to record their total pay before deductions as income. So the gross figure is the one that counts, even though it is more than you were paid.

Source: Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK)

Source: What you must do as a CIS subcontractor: pay tax and claim back deductions (GOV.UK)

Worked example: £36,000 of CIS work

Take a self-employed plasterer whose 2025–26 tax return shows £36,000 of gross CIS work. Every contractor took 20% off, so £7,200 was deducted. Van, tools and materials came to £6,000.

Is this plasterer in MTD from April 2027? Yes.The test uses the £36,000 gross figure, which is over £30,000. It doesn't matter that only £28,800 reached the bank, that the profit is not over £30,000, or that the take-home after costs is £22,800.

If the same work carries on in 2027–28 and is spread evenly, the quarterly updates are cumulative totals from 6 April and look like this:

The fourth update shows £36,000 turnover, not £28,800. The £7,200 never goes in an update. It turns up in the tax return for 2027–28, pre-filled from what the contractors reported. HMRC then takes it off the tax and National Insurance due on the £30,000 profit. If the bill is less than £7,200, the difference comes back as a refund. If it is more, you pay the balance on the usual dates. For a rough idea of your own figure, try the CIS tax refund estimator.

What goes in your quarterly updates (and what doesn't)

• In: your gross CIS income, plus any non-CIS work (cash jobs, private customers), totalled by category.
• In: your allowable expenses, using the same categories as Self Assessment.
• Not in: CIS deductions, contractor names, individual receipts or invoices. Updates are category totals.
• No tax is paid with an update. They are summaries, not tax returns.
• Cumulative: each update covers everything from 6 April to the end of that quarter.
• Nil updates are still required if you had a quiet quarter or were off work.
• Mistakes are fixed in your next update, not by resending the old one.

For the April 2027 group, digital records start on 6 April 2027 (or 1 April 2027 if you choose calendar quarters), and the four updates are due on 7 August 2027, 7 November 2027, 7 February 2028 and 7 May 2028. Full dates for every group are in our MTD deadlines guide.

Source: Send quarterly updates (GOV.UK)

Where your CIS deductions go instead

Your contractors report the deductions they take from you to HMRC. Under MTD, HMRC uses those figures in three places:

1. Your in-year tax estimate. After each update, HMRC's estimate already takes off the deductions your contractors have reported.
2. Your tax return. At the year end your tax return (previously called the final declaration) arrives with a "Construction Industry Scheme (CIS) — subcontractor deductions" figure pre-filled.
3. Your chance to correct it. After your fourth update and before you file the return, you can add, change or delete your own CIS figure in your software if you disagree with what a contractor reported.

You still file the tax return by 31 January after the tax year, through MTD-compatible software, and payment dates (31 January and 31 July) are unchanged. The end-of-period statement HMRC originally planned has been scrapped, so there is no extra form to claim your CIS back.

Source: Submit your tax return (GOV.UK)

Source: HMRC MTD end-to-end service guide: Construction Industry Scheme

When do you get your CIS refund under MTD?

Once a year, with your tax return.Quarterly updates don't trigger a refund, however much was over-deducted. The only way to claim during the tax year is if you stop trading.

For the April 2027 group the timing looks like this:

• 2025–26 and 2026–27: filed the normal way (the 2026–27 return by 31 January 2028). Refunds come exactly as they do now.
• 2027–28: your first year in MTD. Your refund comes with the 2027–28 tax return, which you can send once the year ends on 5 April 2028 and must send by 31 January 2029.

Source: CIS subcontractors: pay tax and claim back deductions (GOV.UK)

Want your refund early? Send your fourth update first

Plenty of subcontractors file in April to get their CIS money back quickly. You can still do that under MTD, but any outstanding updates have to go in before your tax return. The fourth quarter ends on 5 April and its deadline is 7 May, so if you want to file early:

1. Get every CIS statement for the year and check them against your records (see below).
2. Send any updates you have missed, then send the fourth update as soon as the year closes on 5 April.
3. Check the pre-filled CIS figure and correct it if a contractor got it wrong.
4. File your tax return. Any refund is worked out from that.

The usual causes of a slow refund are figures that don't match what contractors reported and statements that never arrived. Both are easier to sort before you file than after.

Chasing late or wrong CIS statements

As one subcontractor put it on a DIY forum, "some companies I sub to are worse than useless issuing the certificates". Under MTD that matters more. HMRC pre-fills your return from what contractors reported, not what you were paid, so a contractor who reported late or got your figure wrong shows up as a gap.

• Match each statement to the payment in your bank as it arrives, not in January.
• Keep a list of payments with no statement and chase them every month or so, in writing.
• If a statement doesn't match what you were paid, ask the contractor to correct it with HMRC.
• Keep the statements. They are your evidence if you need to change the pre-filled CIS figure before you file.

How to record each CIS payment

Record every payment as three figures, not one. For example, a £1,200 job with a 20% deduction:

The gross figure feeds your quarterly update. The deduction adds up to the number you check against HMRC's pre-filled figure at the year end. The net figure is what you match to your bank. Each digital record needs at least the amount, the date and the category, and has to be made no later than the update it feeds into, so a shoebox of CIS statements sorted in January won't do.

Source: Create digital records (GOV.UK)

Penalties in your first year

Late updates normally earn a penalty point each, with a £200 penalty at four points. The Budget on 28 October 2026 announced that people joining in April 2027 will get no penalty points for late quarterly updates in 2027–28. That still has to be passed into law, you must still send every update before you file your tax return, and late tax returns and late payment are still penalised. Details are in our MTD penalties guide.

Source: Budget 2026 (GOV.UK)

How Sleepless Tradesman handles CIS under MTD

• CIS income records with gross, deduction and net kept separately for each payment.
• Tax set-aside estimate that takes your CIS deductions off, so you can see whether you're heading for a bill or a likely refund.
• Quarterly figures in HMRC's MTD format, with gross income and expenses only, ready to export for you or your accountant to submit.
• Expenses, and mileage at HMRC's simplified rates, plus a whole-tax-year records export.

These MTD records are free on every plan, including the free one. Sending updates and the tax return to HMRC straight from the app isn't live yet. It is coming once HMRC approves it. Until then your figures are ready to export for you or your accountant to submit. See the accounting features.

Frequently asked questions