MTD Expenses for Childminders UK: Claiming Costs Under New Rules

From 6 April 2026, self-employed childminders with qualifying income over £50,000 must use Making Tax Digital for Income Tax. The threshold drops to £30,000 for the 2025 to 2026 tax year and £20,000 for the 2026 to 2027 tax year. For a sector built around home‑based care and shared household resources, MTD means a shift from flat‑rate allowances to meticulous digital records. Understanding the new rules now will reduce disruption later.

Wear and tear: 10% allowance disappears

Currently, most childminders deduct a flat 10% of their income for wear and tear on household furnishings. Under MTD, childminders must follow the normal business-expense rules and keep digital records. Once within MTD, childminders should claim actual allowable business costs, including a business proportion where an item is used partly for personal use, which directly affects expense claims for childminders under MTD UK. If a carpet costs £600 and is used 60% for childminding, you can only deduct £360. Childminders not within MTD may continue using the childminder-specific alternative methods, including the 10% wear-and-tear approach where applicable.

Household costs: apportioning bills

Household expenses fall into two categories:

• Running costs: gas, electricity and water
• Fixed costs: Council Tax, rent or mortgage interest

Under MTD, childminders follow normal business rules and apportion mixed-use costs on a reasonable basis. They keep a clear record of how that percentage was reached as part of accurate expense claims for childminders under MTD UK. HMRC accepts reasonable methods such as the following:

• The number of rooms used for childminding
• The time spent caring for children

For example, if half of your home is used for childminding for eight hours a day, it is reasonable to claim a corresponding share of running costs for that period.

If you do not use MTD and care for children in your home for 40 hours or more a week, HMRC allows the following:

• 33% of running costs
• 10% of fixed costs

Lower hours require proportionate adjustments.

MTD replaces these flat rates with tailored calculations. This improves accuracy but increases the need for consistent records and clear justification.

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Food and drink: from estimates to actuals

Childminders provide meals and snacks as part of their service. Under MTD, you must claim the actual amount spent on food and drinks for children and apportion costs when shared with your family. Before joining MTD, you may continue using estimated costs, and receipts are not required for food.

Digital records and quarterly reporting for MTD expenses for childminders in the UK

The main changes under MTD are digital recordkeeping and quarterly updates through compatible software. In 2026, you must use HMRC-compatible software to record each income and expense transaction and send quarterly updates. The threshold falls in 2027 and 2028. If you are not using MTD, you need receipts for business expenses of £10 or more, or small items bought together totalling £10 or more. Those below the threshold can stay on the current system and rely on cashbooks and attendance registers, but careful recordkeeping remains essential.

Why it matters

HMRC estimates that errors and mistakes in self‑assessment account for 18.5% of the tax gap. MTD aims to reduce this by requiring digital records and regular updates. For childminders, non-compliance could result in penalties, interest, and the loss of legitimate tax deductions for childminders MTD UK. Yet the changes also create opportunities: real-time records can improve your understanding of costs, help you set fees and save time during annual returns.

Practical steps to prepare

• Assess your income and register early: decide whether your total trading and property income exceeds the relevant threshold for 2024–25 or 2025–26 and sign up for MTD.
• Select appropriate software: choose a package approved by HMRC that fits your business size and allows easy allocation of business proportions.
• Document expenses as they occur: record the date, amount and description for each purchase. For items shared with your family, note the percentage used for childminding.
• Keep usage logs: maintain records of hours worked and rooms used to support your calculations.

How Apex Accountants can assist

Transitioning to digital reporting while caring for children is challenging. Apex Accountants & Tax Advisors helps childminders by:

• Reviewing income and advising when you must join MTD;
• Setting up and training you on compliant software;
• Designing record‑keeping procedures tailored to your home‑based business;
• Preparing quarterly updates and year‑end submissions;
• Advising on business percentages and maximising tax deductions for childminders: MTD UK.

Contact Apex Accountants today for personalised guidance and peace of mind.

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Call Anytime 0203 883 4777

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FAQs

When does Making Tax Digital apply to me? 

If your income from self-employment and property exceeds £50,000 in 2024–25, you must adopt MTD from April 2026; those above £30,000 will join in 2027. A further reduction to £20,000 is expected in 2028.

Can I still claim the 10% wear‑and‑tear allowance? 

Yes, but only while you remain outside MTD. Once you are mandated to use digital reporting, you must claim the business portion of the actual cost of household items.

How do I work out household expenses? 

Under MTD, calculate a business percentage based on rooms used or hours spent caring for children. The current regime allows flat‑rate percentages of 33% and 10% for running and fixed costs.

Do I need receipts for food and drink? 

No. HMRC guidance says receipts are unnecessary for food and drink provided to children. Receipts are required for expenses over £10 or grouped purchases over £10.