Making Tax Digital for Income Tax: What construction industry workers need to know

From April 2026, self-employed construction workers earning over £50,000 will be required to follow new digital tax rules. Discover what Making Tax Digital for Income Tax (MTD IT) involves, how it links to the Construction Industry Scheme (CIS), and how to prepare.

Making Tax Digital for Income Tax: What construction industry workers need to know

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From April 2026, a major change is coming that will affect many self-employed individuals in the construction industry. If you're a subcontractor or sole trader earning over £50,000, you'll need to comply with Making Tax Digital for Income Tax (MTD IT) - a government initiative designed to modernise the tax system. HMRC will be writing to you to confirm you will need to join the MTD IT programme.

Here’s what you need to know and how to get ready.

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What is Making Tax Digital for Income Tax (MTD IT)?

Making Tax Digital is HMRC's long-term plan to digitise the UK tax system. From April 2026, anyone who is self-employed or a landlord and earns over £50,000 in gross income must keep digital records. They must also submit updates every quarter using HMRC-approved software. The threshold will reduce to £30,000 in April 2027 and will reduce further to £20,000 in April 2028.

Instead of completing a single annual Self Assessment tax return, you’ll need to:

  • Keep digital records of your income and allowable expenses
  • Submit quarterly income and expense summaries to HMRC
  • Send a final declaration at the end of the year

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Why this matters for those in the Construction Industry Scheme (CIS)

If you're CIS-registered and already dealing with deductions at source, MTD IT might feel like just another layer of admin. But it’s important to understand how MTD IT and CIS will need to work together from now on.

Under MTD IT, you’ll need to digitally track all your income (including CIS deductions made by your contractor/company) and report these through MTD IT-compatible software. TaxNav provides a way of digitally recording and then submitting the quarterly figures to HMRC. This can be achieved by simply inputting the transactions or importing a spreadsheet. HMRC is not providing free software for MTD IT.

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Common challenges to expect

Many self-employed people in the construction industry still rely on paper-based recording or spreadsheets to manage their finances. Under MTD IT:

  • You must use HMRC-recognised digital software
  • You’ll need to keep real-time digital records of income and expenses
  • CIS deductions must be recorded and reported accurately by your contractor/company
  • Spreadsheets are an acceptable digital record

Without proper tools or support, this could add to your admin load - especially if you're managing multiple jobs or are on the move.

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But there are benefits too

Making Tax Digital for Income Tax isn’t just about compliance - it can also offer practical advantages:

  • Clearer insight into your earnings and tax position throughout the year
  • Easier tracking of allowable business expenses
  • Fewer surprises at tax time, with better financial control overall

With the right setup, many subcontractors will find it easier to stay on top of their tax and cash flow.

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What construction workers should do next

To make a smooth transition, it’s worth starting your MTD IT preparations now. Here are some key steps:

  1. Check if you’re in MTD IT’s scope: If your total business and/or rental income is over £50,000, MTD applies to you from April 2026.
  2. Explore MTD-ready software: Some digital tools are designed specifically for self-employed workers in construction and CIS. TaxNav is a simple and affordable Making Tax Digital Income Tax product for the construction industry. It is also HMRC-recognised.
  3. Start keeping digital records early: Getting used to digital tracking now will make quarterly submissions much easier when the time comes.

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Choosing the right software

Remember, HMRC won't provide free software for MTD IT, so it's essential to choose a tool that suits your business needs.

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Don’t leave it too late

It’s tempting to put MTD IT on the back burner, but starting early will help you avoid last-minute stress and potential penalties. Join the public beta trial (you can do this with TaxNav) start recording digitally, and ask for help if you need it.

The TaxNav team have designed a simple, browser-based option that’s MTD IT-compliant and designed with construction workers and CIS subcontractors in mind. TaxNav can retrieve from HMRC what your contractor/company has deducted from you.

If you're unsure where to start or want to try software that fits the way you work, we can help you prepare for MTD IT the smart way.

Contact us for more information.

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