Making Tax Digital for Driveway and Paving Contractors —
Quoted Jobs, Deposits & CIS Explained
Deposits on Big Jobs Count When You're Paid, Not When the Job Finishes
Driveway and paving jobs are typically quoted as a total price with a deposit taken before work starts, sometimes with a further stage payment partway through larger jobs. Under the cash basis, which most sole traders use, each payment counts as income when you receive it — a deposit taken in one quarter for a job completed the next is reported in the quarter you were actually paid.
Materials Are a Significant Share of Every Quote
Block paving, resin, tarmac, and sub-base materials represent a substantial portion of most driveway quotes. Your qualifying income is the full quoted price, materials and labour combined, before deducting what you paid your builders' merchant. Contractors who also subcontract under CIS for developers on larger housing schemes follow the standard gross-income rule: qualifying income assessed before the contractor's deduction.
Staged Payments, Deposits and Material Records
Driveway and paving jobs are often paid in stages: a deposit to book, a payment when materials arrive and a balance at completion. Your records need to show each stage as it is received.
- Record every stage payment on the date it is received, with the customer and job reference.
- Keep aggregate, block, slab and edging invoices matched to the job, so the margin is clear.
- Log skip hire, plant hire and waste disposal against the job as well.
- If you hire a mini digger, a plate compactor or a driver by the day, keep the hire invoices separately from purchases.
- Keep photographs of the finished work with the invoice, which supports both the income and any customer query.
Common Mistakes Paving Contractors Make
- Recording only the final payment. A £3,000 deposit received in one quarter belongs in that quarter, not the one when the job finishes.
- Treating materials as reducing income. Material cost is an expense, and the full job price still counts for the threshold.
- Buying plant without a record. Larger equipment is usually a capital allowance, so keep the invoice and date.
- Paying labour informally. If you engage other labourers, check your obligations, including whether you need to register as a contractor under CIS.
- Mixing cash payments. Cash from customers counts exactly like bank transfers.
A Sample Quarter: What the Update Looks Like
A sample quarter for a contractor running two or three jobs at a time on staged payments.
| Q2: 6 July to 5 October 2026 | Amount |
|---|---|
| Deposits received on booked jobs | £6,800 |
| Stage payments and balances on completed jobs | £21,400 |
| Total income | £28,200 |
| Block paving, aggregates and edging | £9,700 |
| Skip hire and waste | £1,450 |
| Plant hire | £1,900 |
| Van and fuel | £1,650 |
| Total expenses | £14,700 |
| Profit for the quarter | £13,500 |
Money received in the quarter is recorded in it, whichever job it belongs to. A deposit for a September start counts in this quarter if it arrived now.
Worked Example
Direct residential jobs (gross, including materials): £32,600
CIS subcontract labour on estate driveways (gross, before 20% deduction): £11,400
Total qualifying income: £44,000 — above the £30,000 Phase 2 threshold, below £50,000. Casey joins MTD from April 2027. Deposits taken on residential jobs are recorded as income when received, which sometimes means a big deposit in March counts in a different quarter to the job itself, completed the following month.
What You Can Claim
- Materials — block paving, resin, tarmac, sub-base aggregate
- Plant and equipment — compactors, cutting equipment, usually claimed in full
- Skip hire and waste disposal
- Van costs — fuel, insurance, or the 55p/mile mileage rate
- Public liability insurance
- CSCS card and CITB levy where applicable to CIS work
Best MTD Software for Driveway & Paving Contractors
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Frequently Asked Questions
When does a deposit on a driveway job count as income?
Under the cash basis, which most sole traders use, it counts as income on the date you receive the deposit, not the date the job is completed.
Is my qualifying income the quoted price, or my margin after materials?
It's the full quoted price, materials and labour combined, before deducting what you paid your merchant for aggregate, block paving, or tarmac.
Is my CIS subcontract income assessed before or after the deduction?
Before. Your qualifying income is your gross invoiced amount, not the amount you actually receive after the contractor's CIS deduction.
Can I claim skip hire and waste disposal costs?
Yes, these are normal allowable business expenses for jobs that generate waste materials.
Do direct residential jobs and CIS estate work combine into one figure?
Yes, all self-employment income combines into a single qualifying income figure regardless of the source.