If you work under the Construction Industry Scheme (CIS), you’re probably used to the annual Self Assessment process for claiming back overpaid tax. But with Making Tax Digital (MTD) rolling out, the way CIS deductions and tax rebates are handled is set to change.
This guide explains what MTD means for CIS workers, sole traders, and self-employed tradespeople. So you know exactly how to stay compliant while still getting the rebate you’re entitled to.
A quick recap: CIS and tax rebates
Under CIS, contractors deduct tax (usually 20% or 30%) from your payments before you’re even paid. While this is designed to cover your tax bill, many subcontractors end up overpaying and claim a rebate through their annual tax return.
For example:
| Income from Contractor | CIS Deducted (20%) | Actual Tax Owed | Refund Due |
|---|---|---|---|
| £30,000 | £6,000 | £4,000 | £2,000 |
So, what does MTD mean for CIS deductions?
With MTD for Income Tax Self Assessment (ITSA), things will look a little different:
- Quarterly updates instead of one annual tax return – you’ll submit income and expenses four times a year.
- Digital records required – CIS income, deductions, and expenses must be logged using HMRC-approved software.
- Faster visibility of overpayments – instead of waiting until the end of the tax year, you’ll see how much CIS tax has been deducted more regularly.
- More accurate tracking of rebates – because your CIS deductions will be digitally matched against your income, errors are reduced.
Will you still get a tax rebate under MTD?
Yes, you can still claim a tax rebate if you’ve overpaid. The main difference is how you report it:
- Quarterly submissions keep HMRC updated.
- A final “end of period statement” (EOPS) will confirm your total income, deductions, and expenses.
- At that point, any refund due will be calculated and repaid as usual.
So while the process changes, the outcome remains the same: if you’ve paid too much tax under CIS, you’ll still get it back.
Benefits of MTD for CIS workers
Although MTD may sound like more admin, it offers real advantages for subcontractors:
- Less chance of missing deductions – digital records capture everything.
- Quicker insight into refunds – no more waiting until the end of the year to see if you’ve overpaid.
- Easier record keeping – simply upload receipts and invoices with your phone.
- Reduced errors and penalties – HMRC’s system is more accurate with digital data.
Preparing for MTD as a CIS worker
Here’s how to get ready now:
- Check your income level – MTD applies to self-employed people earning £50,000+ from April 2026, and £30,000+ from April 2027.
- Choose MTD-compatible software – look for apps that handle both CIS deductions and expense tracking.
- Record deductions digitally – keep copies of payment statements from your contractors.
- Separate personal and business finances – a business bank account makes digital reporting much simpler.
- Start early – get into the habit of logging income and expenses before MTD becomes mandatory.
Final thoughts
MTD won’t stop you from claiming a CIS rebate, it just changes the way you record and submit your information. By using digital tools and keeping on top of quarterly submissions, you’ll not only stay compliant but also make it easier to track overpayments and claim back what you’re owed.
Need Help with CIS Rebates or MTD?
At Tax2u, we’ve helped thousands of CIS workers and self-employed tradespeople maximise their rebates and stay on top of tax changes. Whether you need help getting MTD-ready or want to claim your CIS refund quickly, we’re here to make it stress-free.
Start your CIS rebate claim with Tax2u today and get ready for MTD with confidence.