Making Tax Digital: One Month To Go

If you’re self-employed and working under the Construction Industry Scheme (CIS), Making Tax Digital (MTD) is a change you cannot afford to ignore.

MTD represents one of the most significant reforms to the UK tax system in recent years and it comes into force next month. While many CIS contractors are used to dealing with annual Self Assessment tax returns the way you report your income is about to change. The key message is simple: prepare early and stay in control.

When Will CIS Contractors Be Affected?

MTD for Income Tax is being introduced in phases:

• From April 2026 – individuals earning £50,000 or more
• From April 2027 – individuals earning £30,000 or more
• From April 2028 – individuals earning £20,000 or more

If your total self-employed income exceeds these thresholds, you will need to comply with the new digital reporting requirements set by HM Revenue & Customs.

For many CIS subcontractors, income can fluctuate from year to year. Even if you are below the threshold now, you may move into scope sooner than you expect.

What Will Change?

Under the current system, most CIS contractors submit one Self Assessment tax return each year. Tax is deducted at source, and any rebate you may be due is reclaimed after submission.
Under MTD, that annual-only process changes significantly.

You will be required to:

• Keep digital records of your income and expenses throughout the year
• Submit quarterly updates using HMRC-approved software
• File a final digital declaration at year-end

This means moving from one deadline per year to at least five submissions annually. This creates a new administrative responsibility. Without the right systems in place, the risk of missed deadlines increases.

Why This Matters More for CIS Workers

As a CIS contractor, you already deal with regular deduction statements, variable income, expense tracking and tax refunds and payments. MTD adds another layer of structured digital reporting every quarter.

While the aim is improved accuracy, the reality is more regular bookkeeping and stricter compliance requirements. HMRC will operate a points-based penalty system for missed submissions, and financial penalties will apply once thresholds are reached. Leaving preparation until the last minute increases the chance of errors, stress and avoidable fines.

Moving to Digital – The Practical Side

MTD requires compliant accounting software such as FreeAgent (included in our support packages) or another compatible platform of your choice.

If you currently rely on spreadsheets, paper records or simply hand everything to your accountant once a year, this will be a significant shift. Digital records must be maintained throughout the year, not reconstructed at the end.

The good news is that with the right setup, software can actually make managing CIS income simpler, especially when tracking deductions and monitoring your tax position in real time.

Supporting You To Be MTD Compliant

Our role is to make the transition to MTD straightforward. We help you:

• Choose and implement suitable software
• Record CIS income and expenses correctly
• Understand how quarterly submissions work
• Stay on top of deadlines throughout the year

Beyond setup, we provide ongoing support, preparing and submitting your quarterly updates and final declaration accurately and on time.

Take Action – Before You Have To

Making Tax Digital is approaching quickly. Whether you are already within the income thresholds or likely to be affected in the next phase, early preparation will reduce disruption. Find out more about MTD or get in touch on 01923 257257 for tailored support.