From April 2026, self-employed workers operating under the Construction Industry Scheme (CIS) will be required to use HMRC-approved software to manage and submit their payroll and tax records.

What is Making Tax Digital (MTD)?

MTD requires CIS subcontractors and sole traders to:

• • Keep digital records of income and expenses
  • Use HMRC-approved software to submit tax information
  • Move from annual tax returns to quarterly digital updates

Currently, CIS returns are already submitted digitally, but MTD for ITSA introduces extra digital reporting requirements specifically for CIS subcontractors.

MTD Deadlines for Subcontractors

From April 2026, if you are a CIS subcontractor with annual income over £50,000, you must comply with MTD for ITSA. From April 2027, the threshold lowers to £30,000. This means you will need to:

• Keep digital records of invoices, expenses, and payments
• Submit quarterly updates to HMRC using MTD-compliant software

How MTD Impacts CIS Subcontractors

For Subcontractors (Sole Traders):

• Many subcontractors will need to comply with Making Tax Digital for ITSA when their income exceeds the HMRC thresholds (£50,000 from April 2026, lowering to £30,000 in 2027).

This means:

• Keeping digital records of invoices, expenses, and payments
• Submitting quarterly updates to HMRC using MTD-compliant software