Construction businesses are facing a major change with Making Tax Digital, as HMRC introduces new quarterly reporting requirements from 2026. Construction runs on deadlines. Completion dates, retention releases, CIS payment schedules. This year there’s a new one to add to that list, and it’s coming from HMRC rather than a client: 7 August 2026.
If you’re a sole trader or landlord in the building trade earning above £50,000, that date is your first Making Tax Digital (MTD) quarterly update. For a lot of contractors and subcontractors working under CIS, this isn’t just another form. It’s a real change to how you handle your books day to day.
Why Making Tax Digital Hits Construction Harder Than Most
Tax admin has always been a bit awkward in this trade. Construction businesses deal with CIS deductions, retentions held back for months, and income that swings wildly from job to job. Most builders and tradespeople have got by on a once-a-year sit-down with their accountant, sorting the year’s paperwork into some kind of order in January.
That approach doesn’t work under MTD. Rather than one Self Assessment return, you’ll now need digital records kept up throughout the year, with a summary sent to HMRC every three months. If you’re running several sites at once with CIS payments landing at different times, that’s a proper shift in how you’ll need to work, not a box-ticking exercise.
What’s Actually Changing Under Making Tax Digital
From 6 April 2026, sole traders and landlords with combined gross income over £50,000 from self-employment and property fall under MTD for Income Tax. Gross means turnover before expenses, not profit. So a subcontractor invoicing £55,000 but taking home £35,000 after materials and costs is still caught by this.
Your first quarterly update covers 6 April to 5 July 2026, and it’s due by 7 August. Three more follow across the year, each landing on the 7th of the month after the quarter closes. Once you’ve done all four, you’ll file a year-end declaration by 31 January, which takes the place of the old Self Assessment return.
Paper records won’t cut it anymore, and neither will the old online Self Assessment system. Everyone in scope needs HMRC-approved software to log records digitally and send updates straight through. You can check the latest Making Tax Digital requirements directly through HMRC guidance.
Say You’re a Groundworks Subcontractor
Picture someone earning around £62,000 a year, working across two or three main contractors, paid under CIS with tax deducted before the money even reaches them. Up to now, they’d gather invoices and CIS statements once a year and drop them on their accountant’s desk in January.
That won’t fly anymore. From 6 April 2026, the same subcontractor needs digital records building up from the first day of the tax year, with the first submission due 7 August. Anyone still working from a shoebox of receipts, or a spreadsheet that only gets opened once a year, isn’t ready yet. None of this is difficult to fix, but you need to sort it before the deadline hits, not the week after.
Getting Ready Before the Making Tax Digital Deadline
First, work out whether this actually applies to you. Check your gross income from self-employment and property on your 2024/25 tax return. Over £50,000, and you’re in for this first wave.
Second, get compatible software set up properly. This isn’t something you want to be doing the week before the deadline. Your records need loading in advance, and your CIS income needs categorizing correctly from the start.
Third, get into the habit of logging income and expenses as they come in, rather than trying to piece it together from memory at the end of each quarter. This is where construction businesses tend to trip up, mainly because payments and retentions rarely line up neatly with the work itself.
And don’t leave the conversation with your accountant until late July. Connecting your software, getting your opening figures right, and reconciling that first quarter all takes a bit of time. Far better to do it at a steady pace now than scramble through it later.
Let’s Get You Sorted
At Magnum Accountancy, construction is all we do, so we already know how CIS, retentions and unpredictable payment cycles fit into this picture. Whether you’re still unsure if the rules affect you, or you know you need software support, we can help you get compliant well ahead of 7 August.
Book a free call with us and we’ll walk through exactly where you stand and what still needs doing before the deadline.
