Can I claim back CIS through Making Tax Digital? No, and here’s why.
If you’re a subcontractor or contractor in the construction industry, you’ve probably heard a lot about Making Tax Digital (MTD) over the past year. With the recent MTD deadline, you may also be wondering if it offers a quicker route to getting your Construction Industry Scheme (CIS) deductions back.
Unfortunately, it doesn’t, and as one of the most common misunderstandings we come across at Tax Driven Accountants, we’re here to clear it up.
The short answer is you can’t claim back CIS deductions through MTD
Making Tax Digital is a system for digital record-keeping and quarterly reporting to HMRC. It is not a mechanism for reclaiming overpaid CIS tax.
Submitting your quarterly MTD updates does not trigger a refund of the 20% (or 30%) that contractors have deducted from your payments throughout the year. Your CIS refund still depends on the same underlying processes it always has, and MTD has only changed how and when you report your income and expenses to HMRC.
Why MTD quarterly submissions don’t trigger CIS refunds
Each quarter under Making Tax Digital, you report your gross business income and allowable expenses through HMRC approved, compatible software. That’s all a quarterly update is for, and it gives HMRC an ongoing picture of your trading position across the tax year.
How CIS deductions work differently
CIS deductions don’t fit into that picture in the same way. They aren’t a business expense you enter into your bookkeeping software. Instead, they’re advance payments towards your income tax and National Insurance bill, made on your behalf by the contractor you worked for.
For income tax and national insurance, this can be combined into a single bill if you file through Self Assessment.
Because they’re a tax credit rather than a cost of doing business, there’s no field in a quarterly MTD update where they get “claimed” or reconciled. They sit outside the quarterly cycle entirely and are only brought into the calculation when your full tax position for the year is worked out.
Can I claim back CIS through Making Tax Digital: How CIS over-payments are actually reclaimed
The route to getting your CIS deductions back depends on how you trade.
CIS for sole traders:
Your CIS deductions are set against your total tax liability at your Final Declaration, the annual step (replacing the old Self Assessment return) where your full income, expenses and tax due for the year are calculated.
If the CIS already deducted by contractors is more than your actual tax bill, the excess is repaid to you at that point. This happens once a year.
CIS for limited companies:
The process is completely different and doesn’t go through MTD for Income Tax at all.
Companies reclaim CIS deductions suffered by offsetting them against their monthly PAYE and National Insurance liabilities, reported through the Employer Payment Summary (EPS) as part of payroll RTI submissions. If deductions exceed what’s owed in a given month, the excess is carried forward to the next.
Any amount still unrecovered at the end of the tax year can then be set against the company’s Corporation Tax liability or repaid directly by HMRC, but this is handled as a separate claim, not through MTD.
The gross income threshold trap
One detail that catches a lot of subcontractors out is that MTD for Income Tax is mandatory based on your gross income. This is the total amount you’re paid before the 20% CIS deduction is taken off and not your net, after-tax income.
From 6 April 2026, MTD applies if your gross income from self-employment and/or property exceeds £50,000. That threshold drops to £30,000 from April 2027, and £20,000 from April 2028.
As HMRC looks at gross figures, a subcontractor who feels like they’re earning a modest amount after CIS deductions can still be pulled into MTD sooner than they expect, simply because their invoiced income before deductions crosses the threshold.
How MTD helps your CIS reclaim (Even though you don’t claim through it)
While Making Tax Digital doesn’t process your CIS refund directly, it can still make the eventual reclaim smoother, provided you use it properly.
Logging your Payment and Deduction Statements (PDS) digitally as they come in, rather than leaving them to pile up, means your CIS records are complete and accurate well before your Final Declaration is due.
That reduces the risk of missing statements, mismatched figures, or last-minute scrambling, all of which are common causes of delayed CIS repayments. Good digital habits during the year set you up for a faster, simpler reclaim once the year-end figures are finalised.
Get your CIS refund sorted the right way
CIS and MTD rules can be confusing and getting them mixed up can mean money sitting with HMRC for longer than it needs to, and questions like ‘Can I claim back CIS through Making Tax Digital?’ arise often.
At Tax Driven Accountants, we make sure your records are accurate, reclaims are submitted correctly and on time, and that, within the rules set by UK tax law, you pay no more tax than you legally have to.
If you’d like help getting on top of your CIS position, get in touch and we’ll take it from here. Contact us on 0800 999 1800 or send us an enquiry.
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