Are you in? It’s your takings, not your profit
Add up every invoice you raised in the 2025/26 tax year – labour and materials, for contractors and private customers – using the full amount before any CIS deduction and before you take off what you spent. If that total (plus any rent from property you let) is over £30,000, MTD applies from 6 April 2027. Over £50,000 and you have been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| You invoice the contractor £1,000 for a week’s labour | Gross turnover | Record the full £1,000 as income – this is the figure that counts for MTD. |
| The contractor pays you £800 and keeps £200 for HMRC | CIS deduction (20%) | Record the £200 as CIS tax deducted, not as an expense. Keep the monthly CIS statement. |
| The CIS statements pile up over the year | Tax already paid | Total the deductions – they are taken off your tax bill in the final declaration, often leading to a refund. |
| A homeowner pays you for a garden wall, including the bricks | Turnover (private work, no CIS) | Record the full amount. Nothing has been deducted, so tax on this profit is still to pay. |
| You buy cement, blocks and sand at the merchant | Allowable expense – materials | Keep the receipt or trade account statement; snap it into your app. |
| You buy a new mixer or SDS drill | Equipment – deductible in the year you buy it (cash basis) | Keep the receipt with the date you paid. |
| You take money out for the mortgage and food shop | Drawings – not an expense | Fine to do, but it doesn’t reduce your tax. |
| Every three months | Quarterly update | Your software sends HMRC your gross income and expense totals. |
| After 5 April | Final declaration | Your CIS deductions are set against the tax due; any balance or refund is settled by 31 January. |
What can a builder claim?
✓ Usually allowable
- Materials you buy for jobs – blocks, cement, timber, plasterboard, fixings
- Hand tools and power tools, and repairs to them
- Plant and tool hire, skip hire and waste disposal
- Van running costs (fuel, insurance, servicing) or 45p a mile – not both
- Protective clothing and boots, hard hat, hi-vis and gloves
- Public liability and tools insurance
- CSCS card, training and safety courses that keep your current skills up to date
- Business share of your phone bill
- Accountant’s fees
- Parking and congestion or clean-air zone charges on jobs
✗ Not allowable
- The CIS tax deducted from your pay – it is tax already paid, not a cost
- Everyday clothes you also wear off site
- Travel from home to a site you go to every day for a long job (more than 24 months)
- Parking fines and penalties
- Butties, brews and lunch on site
- Money you take out for yourself (drawings)
Rules that matter for builders
Gross in, deduction separate
Under CIS a registered subcontractor has 20% taken off the labour part of each payment (30% if you are not registered). Materials are not deducted from. Your turnover is always the gross figure on the invoice; the deduction is recorded separately as tax already paid and set off against your bill in the final declaration.
Check your statements match
Contractors must give you a monthly CIS statement. Check each one against what you were paid – mistakes in your name or UTR mean the deduction may not line up with HMRC’s records, which can delay a refund.
Gross payment status
If you have gross payment status, nothing is deducted, so nothing is set off at the end of the year. That means the full tax bill is yours to pay – putting money aside each month matters more.
Paying a labourer yourself
If you take on other workers for construction jobs, you may become a contractor under CIS and have to verify them and make monthly returns. That is separate from MTD, but their pay is an expense in your records.
Worked example
Dan, a CIS subcontractor builder in Swindon (illustrative example)
| Takings (turnover) | £44,800 |
| less Materials not supplied by the contractor | −£4,200 |
| less Van fuel, insurance and servicing | −£4,900 |
| less Tools and repairs | −£1,500 |
| less Plant and skip hire | −£900 |
| less Insurance, CSCS renewal and PPE | −£850 |
| less Phone (business share) and accountant | −£1,100 |
| Profit | £31,350 |
| Income tax (estimate) | £3,756 |
| Class 4 National Insurance (estimate) | £1,127 |
| Total tax for the year | £4,883 |
| Put aside each month | £407 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for a CIS builder: add up the gross amounts on your invoices, enter the CIS deducted from each monthly statement, add any private jobs, photograph merchant and fuel receipts – then submit through your software, or send it all to your accountant. Done after each monthly statement arrives, it takes about 20 minutes; left until the deadline, you are chasing missing statements from contractors.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Construction trades (often CIS).
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £35–£70about £420–£840 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £70–£130about £840–£1,560 a year |
What pushes the price up: matching CIS statements and claiming back tax that was over-deducted; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your business are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions builders ask
The contractor already takes tax off. Why do I still need MTD?
CIS deductions are an advance payment, not your final tax. MTD is about reporting your full income and expenses. At the end of the year the deductions are set off against what you actually owe – often you are due money back.
Is my turnover what I received or what I invoiced?
For MTD and your tax return, it is the gross amount before CIS was taken off. A builder paid £36,000 after deductions may have earned £45,000 gross – and be over the threshold.
Do I record the CIS deduction as an expense?
No. It is recorded as tax already paid. If you put it in as an expense you would be claiming it twice.
Can I claim my van?
Yes, for the business use. You either claim actual running costs (and the van itself, under the cash basis) or use 45p a mile – you pick one method for that vehicle.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.