CIS Subcontractors and Sole Traders: New Rules for Filing Taxes and Claiming Rebates Under HMRC’s Making Tax Digital Scheme

July 29, 2025 – United Kingdom — HM Revenue & Customs (HMRC) is transforming the way self-employed individuals and CIS subcontractors report income and expenses with the rollout of Making Tax Digital for Income Tax Self Assessment (MTD ITSA). Under the new system, traditional self-assessment tax returns will be phased out and replaced by quarterly digital submissions through HMRC-approved software.

The move is aimed at reducing reporting errors and improving compliance by requiring real-time reporting and digital record-keeping.

Who Will Be Affected and When?

MTD will be introduced in phases based on annual gross income before tax deductions:

• From 6 April 2026: Individuals earning £50,000 or more

• From 6 April 2027: Individuals earning £30,000 or more

• From 6 April 2028: All remaining CIS subcontractors and self-employed individuals

How to Comply with MTD and Claim Your CIS Rebate

To stay compliant and continue to claim your Construction Industry Scheme (CIS) rebate, you must follow these new steps:

1. Register for MTD
   Sign up for MTD through HMRC and purchase compatible accounting software.

2. Maintain Digital Records
   You must keep digital records of your income and a breakdown of expenses. These records must be updated and submitted quarterly.

   • Quarter 1: 6 April – 5 July (Submit by 7 August)

   • Quarter 2: 6 July – 5 October (Submit by 7 November)

   • Quarter 3: 6 October – 5 January (Submit by 7 February)

   • Quarter 4: 6 January – 5 April (Submit by 7 May)

3. Submit a Final Declaration
   After the fourth quarter, a final declaration must be submitted to confirm your full year’s figures. This replaces the traditional self-assessment tax return.

4. Receive Your CIS Rebate
   As long as all required submissions are completed accurately, CIS rebates will continue to be paid in the usual way.

Need to Make Changes?

If you discover an error after filing your final declaration, you’ll need to contact the MTD helpline for support in making amendments.

Why HMRC Is Introducing MTD

The core aim of MTD is to reduce mistakes—particularly around exaggerated expense claims—and ensure that tax data is reported more accurately and in real time. The system is designed to simplify tax compliance while reducing the risk of error through automated checks.