If you work as a subcontractor on building sites or larger refurbishment jobs, the main contractor almost certainly deducts tax from your invoices before you're paid — 20% if you're registered under the Construction Industry Scheme (CIS), or a punishing 30% if you're not. It's tempting to think your MTD threshold is based on what actually lands in your bank account. It isn't.
HMRC assesses your MTD threshold on your gross income before CIS deductions. If you invoiced £42,000 in labour and the contractor deducted 20% CIS tax, your qualifying income for MTD purposes is still £42,000, not the £33,600 you received. This catches out a lot of decorators who assume they're safely under a threshold when they're not.
Paint, filler, wallpaper, sundries — if you supply materials as part of a job, that portion is excluded from the CIS deduction calculation (the contractor should only deduct tax from the labour element of your invoice, not materials, provided you've itemised them separately). But materials still count as part of your business turnover and need proper digital records under MTD.
Keep materials and labour clearly separated on every invoice. This protects you from being over-deducted at source, and it makes your MTD quarterly updates far easier to categorise correctly.
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Before. HMRC assesses your qualifying income on your gross CIS labour income, not the amount that actually lands in your bank account after the contractor's deduction. The CIS tax already taken is offset against your final bill separately.
Yes, materials you invoice for are part of your business turnover and go into your digital records, even though they're excluded from the CIS deduction calculation itself. Keep them itemised separately on invoices for both purposes.
Yes. Every stream of self-employment income combines into one qualifying income figure for MTD, regardless of whether it went through CIS or was paid directly by a homeowner.
Usually yes, through the Annual Investment Allowance, which lets you deduct the full cost of most equipment against your profit in the year you buy it, up to a £1 million annual limit.
No, CIS registration is only relevant if you're working as a subcontractor for a contractor on a construction contract. Direct residential decorating work for homeowners falls outside CIS entirely.