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M
Mrfloyds
New Member
July 15, 2026
Question

MTD ON CIS

  • July 15, 2026
  • 10 replies
  • 129 views

Hi everyone,

I’m currently self-employed and get paid using my UTR  number, which means my contractors are deducting tax at source before paying me (under the Construction Industry Scheme / CIS).

The payslips (payment statements) I receive show the gross amount, the tax already deducted, and the final net amount. The net amount is what actually lands in my bank account.

With Making Tax Digital (MTD), I want to make sure my books are 100% accurate.

How can I set up QuickBooks so that it correctly reflects this? Specifically:

  1. How do I record the gross invoice amount and the CIS tax deduction so QuickBooks knows tax has already been paid on this income?
  2. How do I match the net payment coming into my bank feed to the invoice/payslip without leaving an "unpaid" balance on the invoice?

Any step-by-step guidance on how to link these up would be amazing. Thanks in advance!

10 replies

E
EmanE17QuickBooks Team
QuickBooks Team
July 15, 2026

You'll need to enable the CIS feature in your settings first, so QuickBooks can calculate the tax deduction. Next, add your contractor as a customer, since they commissioned the work. Here's how:

 

  1. Go to All apps, select Customer Hub, then choose Customers & leads.
  2. Select New customer, and enter the customer's details.
  3. In the Additional info section, select the Is CIS contractor checkbox.
  4. Enter their VAT Registration Number and Unique Taxpayer Reference.
  5. Once finished, select Save.

 

To record the invoice amount and CIS tax deduction, follow Step 3, then proceed to Step 4 for matching payments received from contractors, as outlined in our article: Setting up CIS Payments and Returns in QuickBooks.

 

Please let us know if you need further assistance.

M
MrfloydsAuthor
New Member
July 18, 2026

Thanks for your reply, but I don't think this applies to my situation.

I'm not a contractor paying subcontractors under CIS. I'm a self-employed subcontractor who has CIS tax deducted from my payments before I'm paid.

I'm using QuickBooks Self-Employed, and I need to know how to correctly record:

  • The gross amount on my CIS payment statement.

  • The CIS tax deducted (so it's recorded as tax already paid).

  • The net amount that actually arrives in my bank account.

For example:

  • Gross amount: £1,000

  • CIS tax deducted: £200

  • Net payment received: £800

How do I record this in QuickBooks Self-Employed so that:

  1. My income is recorded as £1,000 (not £800),

  2. The £200 CIS deduction is recorded as tax already paid, and

  3. The £800 bank transaction matches correctly without leaving an outstanding balance?

If QuickBooks Self-Employed can't do this, could you confirm the recommended way to keep accurate records for Making Tax Digital, or whether QuickBooks Sole Trader or QuickBooks Online is required instead?

Thanks.

E
EvethCQuickBooks Team
QuickBooks Team
July 18, 2026

QuickBooks Self-Employed (QBSE) does not have a built-in feature to handle CIS deductions for subcontractors. It cannot natively record the gross income while tracking the tax already paid.

 

To automate this and remain fully compliant with Making Tax Digital (MTD), we highly recommend upgrading to QuickBooks Sole Trader. This version allows you to:

 

  • Raise an invoice for the full £1,000 gross amount.
  • Automatically apply the £200 CIS deduction.
  • Match the £800 net bank deposit perfectly, leaving a £0 balance.

 

If you prefer to stay on QBSE for now, you will need to record the full £1,000 as income, then log the £200 as a separate business expense or tax payment so your net profit reflects the correct taxable position.

 

Please note that this is a manual workaround and may not satisfy long-term MTD requirements. We recommend speaking with an accountant to confirm the best approach for your business.

 

If you decide that moving to a fully compatible plan is the right route for your MTD obligations, you can explore features and review your options directly on the QuickBooks UK Plans and Pricing page.

 

Please let us know how you'd like to proceed. We're here to help you.

M
MrfloydsAuthor
New Member
July 19, 2026

i am actually already on the sole trader  would you  be to break this process down for me with pictures  if possible as i am really struggling with this 

J
john_TQuickBooks Team
QuickBooks Team
July 19, 2026

Sure, I can provide a step-by-step guide with screenshots to help you record your CIS deduction in QuickBooks Sole Trader.
 

First, enable CIS:
 

  1. Click the Gear icon  then Accounts and Settings.
  2. Go to Advanced hover to Construction Industry Scheme (CIS) and click Edit.
  3. Select “I am a CIS subcontractor” and Save your changes.
     

     

Next, set up your customer as a CIS contractor:
 

  1. Go to Customers and goals the customer profile.
  2. Click Edit (beside New transaction).
  3. Under More info, select “Is CIS contractor” and save.
     

     

Finally, create your invoice:
 

  1. Create a invoice and select the customer you have set up as a CIS contractor.
  2. Select the applicable CIS category based on your CIS payment statement.
  3. Enter the gross invoice amount. QuickBooks will calculate the CIS deduction based on the option selected, or you can manually adjust the deduction if needed.
     

 

Once completed, save the invoice, record the payment received, and match it with your bank.

If you have further questions, feel free to reply to this thread.

M
MrfloydsAuthor
New Member
July 21, 2026

how do i link the transactions 

M
MrfloydsAuthor
New Member
July 19, 2026

thanks you so much the headaches i have had on this is crazy i finally have been able to work this out.

 another question now i have exclude some payments from my expensive and i now cant find where would they have gone ?

 

R
RusimyhrQuickBooks Team
QuickBooks Team
July 19, 2026

We’re glad to hear that our colleagues were able to help you sort out your CIS recording. Regarding your excluded transactions, you can locate them on the Bank transactions page by clicking the Excluded tab. Simply select the checkbox for the transaction and click Undo to move it back to the For review tab.

 

Feel free to reply below if you have any further questions.

M
MrfloydsAuthor
New Member
July 21, 2026

i have some bank transactions that i  cant find from April is there a way that i can manually input them  or another way  so that make the them appear 

R
RoseJillBQuickBooks Team
QuickBooks Team
July 21, 2026

Yes, there is. You can manually import them into your bank feeds using a CSV file. To start, you can obtain the file from your bank website and upload it through these steps: 

 

  1. In Bank Transactions, select the New transaction dropdown.
  2. Select Upload bank statement and click Drag and drop or select files to load your file. Then, click Continue.
  3. Choose the designated account from the Account Name dropdown and click Continue.
  4. Follow the on-screen steps to match columns and select Continue.
  5. Select the transactions you'd like to import and click Continue.
  6. Hit Yes to confirm and click Got it to finish.

 

If you have additional questions, please feel free to add a reply. We're available 24/7 to help.

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