Last checked 19 October 2026
Quick answer
If you’re a self-employed builder or CIS subcontractor, MTD for Income Tax applies once your qualifying income is over £50,000 (from 6 April 2026), £30,000 (from 6 April 2027) or £20,000 (from 6 April 2028), according to GOV.UK. HMRC’s notes say subcontractors include the full amount before CIS deductions.
This is general information, not tax advice. Check GOV.UK or speak to an accountant about your situation. Why we say this.
This guide is for self-employed builders and other construction trades working as sole traders, including subcontractors paid under the Construction Industry Scheme (CIS). Electricians and plumbers have their own guide.
What changes
Digital records
Your self-employment and property income and expenses are kept in compatible software. Spreadsheets can still be used with software that links to them.
Quarterly updates
Every 3 months your software sends HMRC a summary of income and expenses for each business. It isn’t a tax return.
A tax return at the end
You still submit one tax return a year, using your software, and pay your tax bill by 31 January after the tax year ends.
Does MTD for Income Tax apply to you?
GOV.UK says you need to use MTD for Income Tax if you’re a sole trader or landlord registered for Self Assessment, you get income from self-employment or property (or both), and your qualifying income is over the threshold for the relevant tax year. Qualifying income is your total self-employment and property income before expenses (turnover), not your profit.
| Qualifying income on your tax return for | Over | You’ll need to use MTD from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
Source: Find out if and when you need to use Making Tax Digital for Income Tax, GOV.UK.
For CIS subcontractors, the important point is which figure counts. Qualifying income is turnover before expenses, and HMRC’s self-employment notes tell subcontractors to include “the full amount (before Construction Industry Scheme (CIS) deductions made by contractors)”. So the figure tested is what contractors paid before deductions, not the net amount that reached your bank.
Even without a letter from HMRC, GOV.UK says it’s your responsibility to check. Its checker tool can help.
How CIS deductions work
According to GOV.UK’s CIS subcontractor guidance:
- a contractor must deduct 20% from your payments if you’re registered for CIS and they can verify you, or 30% if not. If you have gross payment status, contractors don’t take deductions and you pay your own tax.
- deductions count as advance payments towards your tax and National Insurance
- contractors don’t take deductions from VAT or from materials you’ve paid for directly, and may ask for evidence such as receipts
- each month your contractor must give you a payment and deduction statement within 14 days of the end of the tax month
At the end of the tax year, GOV.UK says a sole trader records total pay before deductions as income, and total deductions as CIS deductions. Under MTD, HMRC’s tax return guidance lists CIS subcontractor deductions among the information HMRC will add to your return in your software for you to check. GOV.UK’s MTD guidance doesn’t say whether CIS deductions appear in quarterly updates; ask your software provider or an accountant how yours handles them.
What you’ll need to keep digitally
GOV.UK says each digital record needs the amount, the date and a category (the same categories as Self Assessment). You also keep supporting records, such as bank statements and invoices, for at least 5 years after the 31 January deadline.
For a builder, that typically means:
- Gross payments from each contractor or customer, with your monthly CIS statements kept as supporting records
- Materials you buy, with receipts
- Tools, van and fuel, and protective clothing such as safety boots and hard hats, all covered in GOV.UK’s expenses guide
If you also take private jobs outside CIS, that income goes in the same business records. If you run two separate businesses, GOV.UK says each needs its own records and quarterly updates.
Key dates
If your qualifying income for 2025 to 2026 is over £30,000, GOV.UK’s published update periods give these dates for your first MTD year, on standard update periods:
- 6 April 2027: MTD starts and your digital records begin
- 7 August 2027: first quarterly update (6 April to 5 July 2027)
- 7 November 2027: second quarterly update (6 April to 5 October 2027)
- 7 February 2028: third quarterly update (6 April 2027 to 5 January 2028)
- 7 May 2028: fourth quarterly update (6 April 2027 to 5 April 2028)
- 31 January 2029: tax return and tax bill for 2027 to 2028
Sources: Send quarterly updates and Submit your tax return, GOV.UK. See our MTD quarterly deadlines 2027 to 2028 page for calendar update periods, and penalty points for late updates.
Free MTD deadline calendar
Add these dates to your phone or computer calendar. No email address or sign-up needed. Download the MTD key dates calendar (.ics)
What kind of software you’ll need
HMRC doesn’t provide software. GOV.UK says yours must create digital records, send quarterly updates and submit your tax return. Some software creates records itself; bridging software connects to records you already keep, such as spreadsheets. Check that any software you’re considering can record CIS deductions alongside gross income. HMRC’s find software tool lists products that have been through its recognition process. We don’t recommend particular products.
Cash and card takings
Private customers sometimes pay cash or by card, and those payments go into your digital records like any other. For CIS work, HMRC’s self-employment notes say a subcontractor’s turnover is the full amount before deductions, which your monthly statements show.
Tip
Keep every monthly CIS statement. GOV.UK says HMRC might ask for evidence of your deductions, and that you should ask your contractor for a replacement if you lose one.
Questions people ask
Do I pay tax every quarter?
No. Quarterly updates are summaries of income and expenses. GOV.UK says MTD won’t change the way you pay tax or the dates payments are due.
Are CIS deductions the same as paying my tax?
They’re advance payments towards your tax and National Insurance, according to GOV.UK. HMRC works out what you owe for the year and takes off the deductions. You pay any balance by 31 January, or get a refund.
Next steps
- Work out your qualifying income: the £30,000 threshold explained
- How to sign up for Making Tax Digital
- MTD quarterly updates explained
- Allowable expenses for sole traders
- What business records to keep
- How much tax to set aside
- The VAT registration threshold explained
Sources
All checked on 19 October 2026.
- Find out if and when you need to use Making Tax Digital for Income Tax (updated 26 March 2026)
- Work out your qualifying income for Making Tax Digital for Income Tax (updated 11 September 2026)
- Create digital records (updated 16 July 2026)
- Send quarterly updates (updated 16 October 2026)
- Submit your tax return (updated 16 July 2026)
- Choose the right software for Making Tax Digital for Income Tax (updated 13 July 2026)
- Find software that works with Making Tax Digital for Income Tax
- What you must do as a Construction Industry Scheme (CIS) subcontractor
- What you must do as a Construction Industry Scheme (CIS) subcontractor: Get paid
- Self-employment (full) notes 2026 (SA103F Notes), HMRC
- Expenses if you’re self-employed