Gloucester has more construction work than anywhere else in the county, and a large share of it is done by self-employed subcontractors under the Construction Industry Scheme. If that is you, January matters twice over this year. Your 2025/26 tax return is due by 31 January 2027, and the figures on it decide whether Making Tax Digital applies to you from April.
CIS and your tax return
Under CIS, the contractor takes 20% off your labour (30% if you are not verified) and pays it to HMRC on your behalf. That money is not lost. It is a payment towards your tax and National Insurance, and it is credited when your return is filed.
Because 20% is often more than the tax due once expenses are taken off, many subcontractors are owed money back. The earlier the return goes in, the earlier the refund arrives. Filing in November rather than January can mean the money lands before Christmas.
To claim it properly you need:
- every monthly CIS statement from every contractor you worked for in the year
- a record of what you spent on tools, materials, van, fuel, phone and protective clothing
- the dates and amounts of any payments you made to HMRC yourself
Missing statements are the most common reason a refund comes out too small. Check the totals against your bank statements before anything is filed.
Making Tax Digital: the test is on gross
Making Tax Digital for Income Tax applies once your qualifying income passes the threshold. For a subcontractor that means your gross turnover, before the CIS deduction and before expenses.
- More than £50,000: in since 6 April 2026.
- More than £30,000: in from 6 April 2027, tested on your 2025/26 return.
- More than £20,000: in from 6 April 2028.
A subcontractor invoicing £35,000 who received £28,000 after deductions is over £30,000 and is in from next April. The CIS deduction does not reduce the figure.
What it means day to day
- Income, CIS deductions and expenses kept in software that works with Making Tax Digital.
- A summary to HMRC each quarter, by 7 August, 7 November, 7 February and 7 May.
- The final return by 31 January, which is where the CIS credit and any refund are worked out.
The quarterly updates do not trigger a refund. CIS deducted during the year is still settled through the final return. For 2026/27, HMRC is not charging penalty points for late quarterly updates, but the usual penalties still apply to a late final return.
Gross payment status
If your turnover is growing, gross payment status lets contractors pay you without the deduction. It depends on turnover tests and a clean compliance record, and late returns or payments count against you. Keeping on top of Making Tax Digital helps protect it.
What to do now
- Gather every CIS statement for 6 April 2025 to 5 April 2026.
- File the 2025/26 return early and claim any refund.
- If your gross invoicing is over £30,000, set up software before April.
Construction and CIS is one of our specialisms, and most of that work comes from Gloucester. See our Gloucester page, the dates on Making Tax Digital, or book a free call.
