Making Tax Digital for Income Tax (MTD ITSA) does not replace CIS — the two run side by side. Contractors still deduct 20% or 30% from your payments and report to HMRC exactly as before. From 6 April 2026, though, if your qualifying income tops £50,000 you must also keep digital records and send HMRC quarterly updates of your income and expenses.
Under MTD, nothing about the deduction itself moves. Contractors still verify you with HMRC before paying, still split labour from materials, and still hand over the deduction on your labour payments. HMRC's monthly CIS statements still arrive by the 19th of the following month.
CIS remains an advance towards your tax bill, reclaimed through Self Assessment. What changes is the reporting around it: instead of one annual snapshot, HMRC wants quarterly visibility of your records.
MTD ITSA becomes mandatory on 6 April 2026 for self-employed people with qualifying income over £50,000. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
Qualifying income means your gross self-employment income — CIS earnings included — plus any property income, before expenses. It is not profit, and it is not what lands in your bank account after deductions. A subcontractor billed £60,000 of labour through CIS is over the threshold even though £12,000 of it went straight to HMRC.
Quarterly updates are due by the 7th of the month after each quarter ends. The deadlines already in play for the 2026/27 tax year are:
Each update summarises the quarter's income and expenses straight from your digital records. Late updates attract penalty points under HMRC's points regime, so the 7 November date deserves a calendar reminder now.
CIS wants evidence: your payment records, the labour and materials split on each invoice, and the monthly statements. MTD wants digital records — every transaction logged with its date, amount and category, in a spreadsheet or software.
A spreadsheet is perfectly acceptable for the record-keeping. Honest small print: no spreadsheet can submit your quarterly update on its own. That final step needs recognised software — or a bridging tool that connects your spreadsheet to HMRC.
Start at the beginning with CIS explained, check your monthly statements and see why you are probably due a refund.
Keep CIS and MTD records in one spreadsheet — dates, amounts, categories, done.
CIS Subcontractor Tax Tracker — £9