Making Tax Digital for Self-Employed Builders and CIS Subcontractors

When MTD Applies to You

MTD for Income Tax becomes mandatory in stages, based on your gross income from self-employment and property combined. From 6 April 2026 it applies if that income is over £50,000. From April 2027 the threshold drops to £30,000, and from April 2028 it falls again to £20,000.

Gross income means your turnover before expenses, not your profit. For a full-time subcontractor, the total of all your invoices (including the labour that CIS was deducted from) is what counts toward the threshold, so many builders are in scope from the first phase.

You have to be signed up and using compatible software from the start of the tax year you are mandated, and HMRC requires you to register in advance. Starting early (running a full year on software before you are forced to) makes the switch painless.

What Changes Day to Day

Two things change. First, you must keep your records digitally: no shoebox of receipts and a once-a-year reckoning. Second, you submit a short summary of your income and expenses to HMRC every quarter, four times a year, instead of a single return in January.

At the end of the year you finalise everything with a final declaration that pulls the year together and produces your tax position. For most subcontractors this is where the CIS refund shows up.

In practice, if you log jobs and expenses as you go, the quarterly updates are a few taps. The work is spread across the year instead of dumped into one stressful January.

Where CIS Fits Into MTD

This is the part the general guides skip. Your CIS deductions are not part of the quarterly income-and-expenses updates. They are reported to HMRC separately, through HMRC's Construction Industry Scheme service, and HMRC brings them into the final tax calculation automatically.

That means two things have to happen for your refund to come out right: your quarterly updates and final declaration have to reflect your real income and expenses, and your CIS deductions for the year have to be recorded and submitted. Get both in and HMRC nets them off, usually in your favour.

Good MTD software for the trades handles both sides in one place so you are not stitching together a return and a separate CIS claim.

What to Look For in MTD Software as a Builder

HMRC recognition. The software must be on HMRC's list of recognised products for MTD for Income Tax. If it is not, it cannot legally submit your updates.

Real CIS support. Plenty of MTD tools handle income and expenses but treat CIS as an afterthought. As a subcontractor, recording CIS deductions and getting them to HMRC is the whole point. Make sure it is a first-class feature, not a workaround.

Pricing that fits how you work. Most accounting software charges a monthly subscription whether you use it or not. For a subcontractor that can mean paying year-round for something you actively use a handful of times. Pay-per-filing pricing fits the trade better.

Simple enough to use on a phone, on site. You should be able to log a job or a fuel receipt from the van, not just at a desk.

How FileThat Works for the Trades

FileThat keeps the income and expenses ledger free all year: log jobs, fuel, tools and materials as you go, from your phone. There is no monthly subscription; you pay a flat fee only when you file.

It supports MTD quarterly updates and the final declaration for Income Tax, and it has a dedicated CIS Deductions screen that records each contractor statement and submits your deductions to HMRC. When you finalise the year, HMRC runs the calculation and processes any refund you are owed.

The pitch is simple: keep your books free all year, file MTD for a few pounds a quarter, and claim your CIS refund without paying an accountant to do it for you.