Written By Jonathan Palmer
CIS + MTD: The Double Compliance Burden Hitting Your Contractors in 2026.
By Paul Gatenby, February 2025
If you’re a recruitment agency running a CIS desk, your contractors are about to get hit with a “Compliance Double-Whammy.” HMRC is layering Making Tax Digital (MTD) right on top of existing CIS requirements.
If your subcontractors aren’t prepared, your supply chain is at risk. Here’s the honest truth about what’s changing.
The “Double-Entry” Trap
MTD for Income Tax does not replace CIS monthly returns. This means subcontractors now have two different reporting cycles:
- The CIS Return: Monthly reporting of deductions (which you or your payroll provider handle).
- The MTD Update: Quarterly reporting of their total income and expenses (which the contractor must handle digitally).
The Risk of “Double Data Entry”
The biggest risk in 2026 is a data mismatch. If a contractor reports “Gross” income on their MTD update that doesn’t align with the “Net” figures reported via CIS, it triggers an automated HMRC flag. Using software that integrates both is the only way for your contractors to survive 2026 without hiring a full-time admin.
The “Straight-Talk” Agency Checklist
[ ] Audit Your Supply Chain: Are your contractors earning >£50k? They need to be on MTD-compliant software by April.
[ ] Fix the “Net vs. Gross” Issue: Ensure your payroll provider is giving contractors clean, digital data they can actually use for their quarterly updates.
[ ] Partner Up: Honest Payroll specializes in CIS-heavy sectors. We ensure the data you report and the data they file match up perfectly.
Don’t let 2026 be the year your compliance fails. We keep it simple: You find the talent; we handle the tax.
Secure Your CIS Supply Chain today . Contact Paul and Oli at Honest Payroll:
Paul Gatenby Global Account Director
paul@honestpayroll.co.uk | 07734 864735
Oli Seddon Business Manager at Honest Payroll
oli@honestinternational.ae | 01524 231199