Boxed Off Accounts › CIS subcontractors
Making Tax Digital · CIS subcontractors
The threshold is measured on your gross income, before the 20% comes off. Thousands of subcontractors are in scope on a number they never see on a payslip.
Ask most subcontractors what they earn and they’ll tell you what lands in the bank. That’s fair enough - it’s the money you actually get. But it isn’t the number that decides whether you’re in Making Tax Digital.
Qualifying income is your gross self-employment income, before expenses and before any CIS deductions. The contractor takes 20% (or 30% if you’re not verified) and pays it to HMRC on your behalf. That money still counts as yours. It’s already in the figure HMRC is looking at.
So this person is in MTD, and has been since 6 April 2026 - even though they’d tell you they earn forty-six grand, which is comfortably under the threshold.
If you invoiced more than £50,000 gross in 2024/25, you’re in. Materials you billed on count too.
Four times a year, you have to send HMRC a summary of your income and expenses through recognised software, on top of the annual return. The dates are 7 August, 7 November, 7 February and 7 May. Then a final declaration by 31 January, which replaces the Self Assessment return you’re used to.
It isn’t more tax. It’s the same tax, reported four times as often.
Your CIS deductions are tax you’ve already paid. They come off what you owe in January, and for a lot of subcontractors they cover most of it - which is why a CIS refund is such a common outcome.
The problem is that almost nobody tracks it through the year. You see a profit figure that looks alarming and no sign of the tax you’ve already handed over. Then January arrives and it turns out fine, or it doesn’t, and either way it was a surprise.
This is the bit we think is worth paying for. Every quarter we send you one page: what you made, what it cost, the tax building up - and the CIS already deducted set against it. So you know where you stand in August, not in January.
Covered above, and it’s the big one. Always work from the gross.
CIS is deducted on labour, not on materials you’ve billed separately. But both count towards qualifying income, and the materials are an expense in your accounts. Getting the split right matters for the numbers and for the deduction statements.
Paid cash for a skip, a delivery, a bit of help on site? That’s a deductible cost, but only if there’s a record. Under MTD the records have to be digital, so a photo of the receipt is the minimum.
It’s a job, not a crisis. There are no penalty points for late quarterly updates in 2026/27. They start on 6 April 2027 - four points brings a £200 penalty, then £200 for each further miss. Late filing and late payment penalties on the annual return already apply as they always have.
So if you’ve missed one, get the records straight and file. Anyone telling you there’s a fine coming this year is wrong.
The checker asks six questions and takes about a minute. Use your gross invoiced figure, before CIS. You get your answer on screen - no email needed.
General information about how the rules work, correct as at September 2026. Not advice about your own tax position - for that we’d need to look at your figures. Software is HMRC-recognised.