Making Tax Digital for Painters and Decorators —
The CIS Gross Income Rule Explained
Why Your MTD Threshold Isn't What You Think
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.
Materials Are Excluded from CIS, But Not From Your Turnover Story
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.
Records for Domestic Jobs, Contracts and CIS
Decorators mix domestic jobs paid directly with contract work that may be under CIS. Records should keep both clear, along with paint and materials.
- Record each job with the customer, price and deposit.
- Record CIS work at gross, and keep monthly statements.
- Keep paint, filler and decorating supplier receipts matched to jobs.
- Keep ladder, sprayer and tool costs, treating larger items as capital.
- Log mileage between jobs.
Where Painters and Decorators Go Wrong on MTD
- Testing on profit. Paint and materials do not reduce the income tested.
- Counting net CIS pay. Use the gross invoice.
- Forgetting deposits. A deposit counts when it arrives.
- Missing labourers. If you pay help, record it and check your obligations.
- Skipping insurance. It is allowable and often essential.
A Sample Quarter: What the Update Looks Like
A sample quarter for a decorator mixing private homes and contractor work.
| Q2: 6 July to 5 October 2026 | Amount |
|---|---|
| Domestic decorating jobs | £10,200 |
| CIS contract work (gross) | £6,400 |
| Total income | £16,600 |
| Paint and materials | £3,100 |
| Tools, ladders and sprayer | £560 |
| Van, fuel and insurance | £1,750 |
| Labourer | £1,300 |
| Total expenses | £6,710 |
| Profit for the quarter | £9,890 |
Materials are an expense, and the £16,600 invoiced is what counts for the threshold.
Worked Example
CIS labour invoiced (gross, before 20% deduction): £31,400
Materials invoiced separately (excluded from CIS, included in turnover): £4,200
Direct residential client work (no CIS, paid in full): £9,800
Total qualifying income: £45,400 — above the £30,000 Phase 2 threshold, below £50,000. Dylan joins MTD from April 2027, based on his 2025/26 tax return. The 20% already deducted from his CIS labour is offset against his final tax bill — it doesn't reduce his qualifying income figure for MTD purposes.
What You Can Claim
- Materials and consumables — paint, brushes, rollers, dust sheets, filler, sandpaper
- Van costs — fuel, insurance, servicing, or the simplified mileage rate (55p/mile for the first 10,000 business miles)
- Tools and equipment — ladders, scaffold towers, sprayers, usually claimed in full via the Annual Investment Allowance
- Protective clothing — overalls, safety boots, dust masks
- Public liability insurance and any trade association membership
- CITB levy or CSCS card renewal where applicable
Best MTD Software for Painters & Decorators
Software links are affiliate, help fund CheckMyMTD. Recommendations based on ease of use for self-employed income tracking.
Frequently Asked Questions
Does my MTD threshold use my income before or after the 20% CIS deduction?
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.
Are materials I supply included in my MTD qualifying income?
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.
I do some CIS subcontracting and some direct client work. Do both count?
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.
Can I claim the cost of a new spray gun or scaffold tower in one go?
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.
Do I still need to register for CIS if I only do direct client work?
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.