MTD for Construction Workers: CIS and Digital Records

Working in construction under the Construction Industry Scheme (CIS) creates specific challenges for MTD compliance. Your income has deductions taken at source, you may work for multiple contractors, and you need to track materials carefully. Here is how to handle it all.

CIS and MTD: The Basics

As a CIS subcontractor, your contractors deduct 20% (or 30% if unregistered) from your payments. Under MTD, you need to:

• Record your gross payment (before CIS deductions)
• Record the CIS deduction separately
• Track materials supplied (which are exempt from CIS deductions)
• Submit quarterly updates showing all of the above

Why Gross Recording Matters

Many construction workers only record the net amount they receive in their bank account. Under MTD, this is insufficient. You must record the gross amount because:

• Your quarterly updates must show your true income
• CIS deductions are credits against your tax bill, not invisible money
• If you only record net amounts, you will understate your income and miss your CIS deduction credits

Materials and CIS

When you supply materials on a job, the materials cost is excluded from the CIS deduction calculation. Only the labour portion is subject to deduction.

Example: You invoice £5,000 — £3,500 labour and £1,500 materials. The CIS deduction is 20% of £3,500 = £700. You receive £4,300 (£5,000 minus £700).

Your MTD records should show:

• Income: £5,000 (gross)
• CIS deduction: £700
• Net received: £4,300
• Materials: £1,500 (as a cost of goods expense)

Working for Multiple Contractors

Many construction workers have several contractors. Each provides separate CIS payment and deduction statements. You need to:

• Collect statements from every contractor
• Record each payment with its gross amount and CIS deduction
• Keep statements organised by contractor and date
• Ensure all deductions are claimed in your final declaration

Setting Up Your Software

Choose MTD software that understands CIS, like Accounted. Set up:

• Your CIS registration status (registered at 20% or unregistered at 30%)
• Separate tracking for labour income and materials
• CIS deduction recording against each payment
• Categories for construction-specific expenses (tools, PPE, travel to sites)

Expenses Construction Workers Can Claim

• Tools and equipment
• Personal protective equipment (PPE)
• Work clothing (not everyday clothing)
• Travel to temporary workplaces
• Subsistence when working away from home
• Vehicle costs or mileage
• Phone costs (business proportion)
• Public liability insurance
• Professional body memberships (such as CSCS card fees)
• Training and certification costs

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