Bricklayers and MTD: managing CIS deductions, trowel wear, and site travel

The contractor’s statement says £1,250, but only £1,000 reaches your bank. You know the missing £250 is CIS tax. The question is where each figure belongs when keeping records for Making Tax Digital for Income Tax.

For a self-employed bricklayer, getting that distinction right matters twice: it establishes the income used for the MTD threshold, and it makes sure tax already deducted is properly accounted for at the year end.

Once gross earnings, CIS deductions and business expenses are kept separate, the records become much easier to follow.

Use gross earnings when checking MTD

MTD qualifying income is broadly your combined sole-trader and property income before expenses. For a CIS subcontractor, the relevant sales figure is normally before contractors deduct CIS tax.

The sole-trader timetable is:

These are HMRC’s entry rules, subject to exemptions. They do not impose an immediate start when this week’s payment takes you over a threshold. Your reference-year position determines the start date.

This guide assumes you operate as a sole trader. A company or partnership needs a separate assessment. If you also have reportable rental income, include the relevant amount when checking your personal qualifying income.

Worked example: net bank receipts below £50,000

Imagine a labour-only bricklayer’s 2024–25 records show the following. All payments attract 20% CIS deductions, there is no VAT and the figures are illustrative.

The MTD qualifying-income figure from this trade is £62,000. Assuming continued trading and no exemption, the start date was 6 April 2026.

The £12,400 is tax paid on account, not a trading expense. HMRC takes eligible CIS deductions into account against the final liability. The example follows HMRC’s instructions for reporting gross pay and CIS deductions.

Quarterly updates do not charge CIS tax again

Sending an MTD update does not mean paying another 20% of that quarter’s earnings. Updates report business figures; they do not introduce quarterly tax-payment deadlines.

The final annual calculation considers your taxable profit, other income, allowances and relevant tax already paid, including CIS deductions. A refund is possible if too much was deducted, but is not automatic. Other income or an insufficient deduction may leave a balance to pay.

Keep every contractor’s payment and deduction statement. Compare gross pay, deductions and net payment with your own records. HMRC may make CIS information available in your annual-return process, but you still need to check it against the evidence.

If a statement is missing or the figures disagree, contact the contractor while the payment is recent. A bank statement alone will not reliably reconstruct how much CIS tax was taken.

Understand when 20% applies

Registered subcontractors commonly have 20% deducted, unregistered subcontractors commonly have 30%, and approved gross-payment status normally means no deduction. Contractors must use the result of HMRC verification.

The deduction base is not always the entire invoice. VAT and eligible directly purchased materials are among the amounts excluded under the rules. HMRC explains how subcontractor payments are calculated.

If you supply materials, keep evidence of their actual cost and identify them accurately. Do not label part of your labour as materials simply to reduce the deduction. The fact that materials are excluded from the CIS deduction calculation does not automatically exclude the customer’s payment for them from your trading income.

Record tools, protection and site costs

Section 34 of the Income Tax (Trading and Other Income) Act 2005 requires deductible expenditure to be wholly and exclusively for the trade. HMRC explains the business-purpose test.

Typical costs to review include:

• Trowels, line pins, levels and spot boards.
• Cement mixer and other equipment hire.
• Consumables used for paid bricklaying work.
• Necessary safety boots, gloves and protective clothing.
• Business insurance and relevant refresher training.

Ordinary clothing does not automatically qualify because it gets dirty on site. Distinguish protective wet-weather clothing from everyday coats or trousers. HMRC’s clothing guidance explains the difference.

Keep invoices for reusable tools and larger equipment. Cash-basis purchases generally receive the appropriate expense deduction when paid, while traditional accounting generally uses capital allowances. Do not deduct an estimated amount for “trowel wear” as well as claiming the actual purchase through the correct route.

Site travel depends on the way you work

Travel between business sites can be deductible. Travel from home needs a closer look at your real business base and whether the work is genuinely itinerant.

HMRC’s manual discusses Horton v Young, a case involving a bricklayer travelling from a home business base to temporary sites. Its guidance on travel to and between sites explains why the actual working pattern matters.

There is no simple rule that every journey to a building site qualifies. Equally, it is wrong to assume every home-to-site trip is ordinary commuting. Keep locations, dates, business purposes and the pattern of your work so the treatment can be assessed properly.

Choose an eligible mileage method or the appropriate business share of actual vehicle costs. Avoid claiming fuel and running costs again if they are already covered by simplified mileage.

Take care when you lead a gang

If you contract for the job and pay other bricklayers as subcontractors, the whole job payment may be your business income, with separate subcontractor expenses. Your turnover is not automatically just the amount you keep.

You may also have CIS contractor responsibilities for payments to the gang, alongside your own subcontractor position. Employment status must be considered before treating someone as self-employed. HMRC’s CIS overview explains that a business can be both contractor and subcontractor.

If you merely collect money as an agent for separately contracted workers, the analysis may differ. Keep the agreements clear and have the arrangement reviewed rather than guessing from the bank transfer.

Build a review around contractor statements

MTD operates under the Income Tax (Digital Obligations) Regulations 2026 and HMRC’s quarterly update direction.

For standard 2026–27 periods, deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. Updates accumulate from 6 April. HMRC’s guidance gives the full timetable.

Before submitting, compare contractor statements, bank receipts, material purchases and travel records. Your annual 2026–27 return is due by 31 January 2028. Quarterly penalty relief for the first year does not waive annual filing, tax payments or separate CIS contractor duties.

Keep the three figures separate

Gross earnings, business expenses and CIS tax already paid each answer a different question. Keeping them clear helps prevent missed income and lost tax credits.

Avona.app costs £15/month, with Avona AI helping categorise transactions for review. Keep the supporting CIS statements so net bank receipts can be checked against gross earnings. For managed support from chartered accountants, Avona Concierge starts from £60/month.

Explore the Avona options and choose the support that suits your site workload.