If you’re a CIS worker, sole trader, or self-employed and paid by a contractor, you’ll soon need to follow Making Tax Digital (MTD) rules. HMRC is phasing in digital record-keeping and quarterly tax submissions from April 2026, with all self-employed and landlords earning over £50,000 affected first. By April 2027, those earning over £30,000 will also join.
Here’s what that means for you, and how to stay compliant without added stress.
What is MTD and why does it matter if you’re paid by a contractor?
Making Tax Digital (MTD) is HMRC’s initiative to modernise the tax system. Instead of submitting one annual Self Assessment tax return, you’ll need to:
- Keep digital records of your income and expenses.
- Submit updates to HMRC every quarter through MTD-compatible software.
- File an end-of-period statement at the end of the tax year.
If you’re under the Construction Industry Scheme (CIS) and get paid by contractors, your deductions and income must also be tracked digitally. Relying on paper records or spreadsheets won’t keep you compliant.
Key MTD deadlines for self-employed and CIS workers
| Date | Who it applies to | Requirement |
|---|---|---|
| April 2026 | Self-employed & landlords with income over £50,000 | Must comply with MTD for Income Tax Self Assessment (ITSA). |
| April 2027 | Self-employed & landlords with income over £30,000 | MTD rules extended to this group. |
| Below £30,000 | TBC | HMRC has paused plans, but further updates may follow. |
How MTD affects CIS workers paid by contractors
Being paid under CIS already means contractors deduct tax at source before paying you. With MTD, you’ll need to:
- Record each payment you receive from contractors digitally.
- Track CIS deductions accurately.
- Submit quarterly updates showing gross income and CIS tax deducted.
- Avoid mismatches between your records and HMRC’s system.
This is crucial, as errors in CIS reporting are one of the main reasons refunds are delayed or challenged.
How to stay compliant with MTD
Here’s what you should be doing now to prepare:
- Use MTD-compatible software
HMRC requires you to use approved software to submit updates. Spreadsheets alone won’t cut it. - Keep records in real time
Log contractor payments, CIS deductions, and expenses as they happen, not months later. - Check your CIS statements
Contractors should provide monthly CIS deduction statements. Make sure they match what you record. - Plan for quarterly submissions
Set reminders for deadlines – late filings can mean penalties. - Get professional help
Accountants and tax partners like Tax2u can handle submissions, reconcile CIS data, and keep you fully compliant.
Benefits of getting ahead with MTD
- Fewer surprises at year-end.
- Better visibility over income and CIS deductions.
- Reduced risk of penalties for late or incorrect returns.
- Quicker CIS tax refunds when records are accurate.
Don’t wait until 2026 to prepare
The reality is, MTD will change how you manage tax. Starting now gives you time to get used to digital records without the pressure of looming deadlines.
At Tax2u, we already help thousands of CIS workers and sole traders track their income, claim refunds, and stay compliant. When MTD arrives, you’ll be ready.