CIS Tax · Making Tax Digital · 2026/27
Making Tax Digital for Income Tax is live for anyone over £50,000 and reaches £30,000 in April 2027. For CIS subcontractors, the threshold catches more people than expected, because it counts your materials too. Here is who is in, when, and what actually changes.
By QuoteDone Editorial Team · Last updated: 25 September 2026 · Checked against GOV.UK and HMRC guidance
Making Tax Digital (MTD) for Income Tax changes how often you report to HMRC, not how much tax you owe. Instead of one return a year, you keep digital records and send a short cumulative update every quarter, then file your tax return as usual by 31 January.
For CIS subcontractors, two things matter most: whether you are in, which depends on a turnover figure that includes materials, and how CIS fits into the new rhythm.
Who Is In, and From When
| MTD mandatory from | Qualifying income over | Tested on your return for |
|---|---|---|
| 6 April 2026 (already live) | £50,000 | 2024/25 |
| 6 April 2027 | £30,000 | 2025/26 (due 31 January 2027) |
| 6 April 2028 | £20,000 | 2026/27 (due 31 January 2028) |
No date has been set for qualifying income of £20,000 or less. Some people can apply for an exemption, for example if it is not reasonably practical for them to use digital tools. Source: GOV.UK – Check if you need to use MTD for Income Tax.
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Why More CIS Workers Are In Than They Think
Qualifying income is gross self-employment turnover plus gross property income, added together, before any expenses. For a CIS subcontractor, turnover is everything you invoiced, including materials, not the net amount paid after CIS was deducted.
Three subcontractors, 2025/26: who must use MTD from 6 April 2027?
Subcontractor A may have a taxable profit well below £30,000 after expenses. It does not matter: the test uses turnover. Subcontractor C is likely to be in from April 2028 if 2026/27 turnover is over £20,000.
The Quarterly Calendar
Updates are due on the 7th of the month after each quarter ends. Each one is cumulative from 6 April, so a mistake in one quarter can be corrected in the next.
| Quarter | Period | 2026/27 deadline (£50k+ group) | 2027/28 deadline (adds £30k+ group) |
|---|---|---|---|
| Q1 | 6 April – 5 July | 7 August 2026 (passed) | 7 August 2027 |
| Q2 | 6 July – 5 October | 7 November 2026 | 7 November 2027 |
| Q3 | 6 October – 5 January | 7 February 2027 | 7 February 2028 |
| Q4 | 6 January – 5 April | 7 May 2027 | 7 May 2028 |
| Tax return | Whole year | 31 January 2028 | 31 January 2029 |
What Changes and What Stays the Same
| Before MTD | Under MTD | |
|---|---|---|
| Records | Any format | Digital, in compatible software (or spreadsheet with bridging software) |
| Reporting | One return a year | Four cumulative quarterly updates, then the return |
| Tax return deadline | 31 January | 31 January (unchanged) |
| Payment dates | 31 January, 31 July | Unchanged |
| CIS deductions | Credited on the return | Still credited when your return is filed; the refund comes the same way |
| Late filing | £100, then more | Penalty points; £200 at 4 points for quarterly filers |
| Late payment | 5% at 30 days, 6 and 12 months | 3% at day 15, +3% at day 30, then 10% a year (2026/27 rates) |
How CIS Fits Into MTD
Your quarterly updates summarise your business income and expenses. The CIS deducted by your contractors still counts towards your tax bill, and it is taken into account when your tax return is filed at the end of the year, which is where any CIS refund is worked out. HMRC notes that some MTD software can handle CIS deductions for you, so ask about this when choosing a product.
In practice, MTD rewards what already makes CIS easier: logging each monthly payment and deduction statement when it arrives, and keeping labour and materials separate on every invoice.
Getting Ready: Step by Step
- Work out your qualifying income. Add your gross self-employment turnover (including materials) and any gross property income for 2025/26.
- If it is over £30,000, plan for 6 April 2027. If you are already over £50,000, you should have been using MTD since 6 April 2026.
- Choose software. Use HMRC's software finder on GOV.UK. Spreadsheets are allowed with bridging software, and some products are free for simple affairs.
- Sign up through GOV.UK. Choosing software alone does not enrol you.
- Start digital records from 6 April. Log income, expenses and CIS statements as they come in.
- Put the four quarterly dates in your diary, plus 31 January for the return.
- If digital tools are not practical for you, look at applying for an exemption instead.
Frequently Asked Questions
When does Making Tax Digital apply to CIS subcontractors?
From 6 April 2026 if your qualifying income on your 2024/25 return was over £50,000; from 6 April 2027 if it is over £30,000 on your 2025/26 return; and from 6 April 2028 if it is over £20,000 on your 2026/27 return.
What counts as qualifying income for a CIS subcontractor?
Your gross self-employment turnover plus any gross property income, before expenses. For a CIS subcontractor, turnover is the full amount you invoiced, including materials, not the net amount you received after CIS deductions.
What are the MTD quarterly update deadlines?
7 August, 7 November, 7 February and 7 May, for the quarters ending 5 July, 5 October, 5 January and 5 April. Each update is cumulative from 6 April.
Do I still file a tax return under MTD?
Yes. You still submit a tax return by 31 January after the tax year ends, through your software. That is where your CIS deductions are taken into account and any refund is worked out.
Are there penalties for late MTD quarterly updates?
Not for the 2026/27 tax year: HMRC will not give penalty points for late quarterly updates in that first year. From 2027/28, each missed deadline earns a point, and a £200 penalty applies once you reach 4 points.
Does MTD change when I pay tax?
No. Payment dates stay the same: 31 January, and 31 July if you make payments on account. What changes from 2026/27 for MTD users is the late payment penalty, which starts at 3% of the tax owed after 15 days.
Can I use a spreadsheet for MTD?
Yes, if you link it to HMRC through bridging software that is compatible with MTD for Income Tax. Otherwise you need MTD-compatible software; some free products are available for simple affairs.
Important: This article is general information about Making Tax Digital for Income Tax, not personal tax advice. Whether and when MTD applies depends on your own qualifying income. Always verify against GOV.UK or speak to a qualified accountant.
Author: QuoteDone Editorial Team · Last updated: 25 September 2026
Sources: GOV.UK – Check if you need to use MTD for Income Tax · HMRC – Get ready for Making Tax Digital · GOV.UK – MTD penalties
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