If you childmind from home, your books are not like a shop's or a contractor's. You estimate food costs without receipts, you apportion part of your home, and until recently you could lean on a set of HMRC percentages built just for childminders. That last point changed on 18 March 2026, and it changes what your software needs to do.
This guide is about picking accounting software that fits how childminders actually work and that keeps you on the right side of Making Tax Digital (MTD) for Income Tax. We will not push one brand. Instead, we will show you the features that genuinely matter for childminding, what the recent HMRC change means in practice, and a worked example so you can see the numbers.
It is written for self-employed childminders in England, Wales and Northern Ireland registering for the 2025/26 tax year. Scotland sets some of its own rates, so treat the figures here as the rUK position.
What should you look for in accounting software as a childminder?
In short: pick software that is on HMRC's MTD-compatible list, lets you record income and expenses on the cash basis, and can handle the home and food costs that are unique to childminding. The brand matters far less than whether it does those three things cleanly.
Most childminders do not need a heavy product built for VAT-registered companies. You are almost never VAT registered, because the VAT registration threshold is £90,000 of taxable turnover (from 1 April 2024), and very few childminders get near that. So you can ignore VAT features entirely and focus on the basics done well.
Does it need to be on HMRC's MTD-compatible software list?
Yes, if and when you fall inside MTD for Income Tax. MTD for Income Tax requires you to keep digital records and send quarterly updates to HMRC using compatible software, so a spreadsheet alone will not meet the rules unless it connects to HMRC through bridging software.
The rollout is staged by your qualifying income, which is your combined gross income from self-employment and property before expenses:
| MTD for Income Tax phase | Qualifying income over | Mandatory from |
|---|---|---|
| Phase 1 | £50,000 | 6 April 2026 |
| Phase 2 | £30,000 | 6 April 2027 |
| Phase 3 | £20,000 | 6 April 2028 |
Most childminders sit below £50,000, so the immediate April 2026 deadline will not catch everyone. But the threshold steps down to £30,000 and then £20,000, so a growing number of childminders will be inside MTD over the next few years. Choosing MTD-ready software now saves you a switch later. You can check your own position on the gov.uk tool for when to sign up.
Should you use the cash basis?
For most childminders, yes. The cash basis is now the standard way for sole traders to record income and expenses, and it means you record money when it actually moves, not when you invoice. So if a parent pays late, that income lands in the period you receive it, not the period you cared for the child.
Good software lets you tick a cash-basis setting so it does the timing for you. For a home-based childminder paid in cash, by bank transfer and through schemes like Tax-Free Childcare, this keeps things simple and matches how the money really arrives.
Can it handle childminder-specific expenses?
This is where generic software trips childminders up. Your books need to cope with three things that most businesses never touch:
- A share of your household running and fixed costs, because you work from home.
- Food and drink for the children, often estimated without receipts.
- Wear and tear on furniture and household items the children use.
The software does not have to know the childminder rules itself. What it must do is let you enter these as expense categories and attach a note explaining the basis. We will explain those rules next, because they drive what you record.
What changed for childminders on 18 March 2026?
HMRC updated its childminder guidance (manual reference BIM52751) so that once you are inside MTD for Income Tax, you can no longer use the childminder-only shortcuts. You move to the same expense and record-keeping rules as every other business from the date you first come within MTD.
For years, childminders could use a special agreement set out in BIM52751. It let you claim a percentage of household running and fixed costs based on the hours you childmind, deduct 10% of your childminding income for wear and tear, and estimate food costs without keeping receipts.
After the 18 March 2026 update (the page was last updated on 21 May 2026), those shortcuts are withdrawn for childminders inside MTD. If you are inside MTD, you use actual figures and standard apportionment, or the generic simplified expenses that any sole trader can use.
Crucially, HMRC confirms that childminders not within MTD may carry on using the agreement: "Childminders not within MTD may calculate their expenses and keep records following this guidance. Their statutory rights are not affected." So the shortcuts are not gone for everyone, just for those who have entered MTD.
What does this mean for your software choice?
It means your software has to be good at recording actual costs and apportioning them, not just plugging in a percentage. If you are not yet in MTD, you might still use the agreement percentages, so your software should let you record both styles. The table below shows the two worlds side by side.
| Cost area | Childminder NOT in MTD (BIM52751 agreement still allowed) | Childminder INSIDE MTD (standard rules) |
|---|---|---|
| Household running and fixed costs | Set percentages by hours worked, up to 33% running and 10% fixed at 40+ hours a week | Actual costs, fairly apportioned for business use, or flat-rate simplified expenses for working from home |
| Wear and tear | 10% of total childminding income | Actual cost of replacing furniture and household items, apportioned |
| Food and drink for children | Reasonable estimates, receipts not required | Standard record-keeping applies |
For the household-use percentages, BIM52751 sets them by hours childminded per week. At 10 hours it is 9% running and 3% fixed, rising in steps to 33% running and 10% fixed at 40 hours or more. If you childmind part-time, you pro-rata down using the table on the gov.uk page.
If you are inside MTD and using actual costs, the flat-rate simplified expenses for working from home are a simpler alternative: £10 a month for 25 to 50 hours of business use, £18 for 51 to 100 hours, and £26 for 101 hours or more. These exclude phone and internet, which you claim separately.
Worked example: choosing how to record use-of-home costs
Numbers make this clearer than rules. Here is an illustrative comparison for a childminder picking how to record her home costs in 2025/26.
Illustrative example. Priya is a full-time childminder working 40 hours a week from home. Her total childminding income for 2025/26 is £24,000. Her household running costs (gas, electricity, water) for the year are £2,400, and her council tax and insurance (fixed costs) are £1,800.
Option A, the BIM52751 agreement (only if she is NOT in MTD):
- Running costs: 33% of £2,400 = £792
- Fixed costs: 10% of £1,800 = £180
- Wear and tear: 10% of £24,000 = £2,400
- Total home-related deduction: £792 + £180 + £2,400 = £3,372
Option B, flat-rate simplified working-from-home expense (available inside or outside MTD):
- 40 hours a week is well over 101 hours a month of business use, so the rate is £26 a month.
- £26 x 12 = £312 for the year.
- Note this flat rate covers household running and fixed costs only. Wear and tear on furniture is not covered, so Priya would claim the actual replacement cost of items separately when she replaces them.
In this illustration the agreement (Option A) gives a much larger deduction than the flat rate, mostly because of the 10% wear and tear figure. That is exactly why the 18 March 2026 change matters: once Priya is inside MTD, Option A is off the table and she has to compare the flat rate against her actual, apportioned costs and recorded replacements. Whatever you choose, the maths only works if your software has logged the underlying figures cleanly all year. Our bookkeeping service can set up a simple system for capturing them.
What features actually matter, and which can you ignore?
Childminders waste money on features built for bigger businesses. Here is how to separate the useful from the irrelevant.
Features worth paying for
- MTD for Income Tax compatibility, so you are ready when your threshold bites.
- Cash-basis recording, matching how you are paid.
- Bank feed or easy manual entry, so Tax-Free Childcare payments, local authority funding and cash all land in one place.
- Custom expense categories, so you can separate home costs, food and wear and tear.
- Mileage logging, for trips like the school run, nursery drop-offs and outings.
- Receipt capture and notes, so you can record the basis for an estimate.
On mileage, the simplified expenses flat rate for cars is 45p a mile for the first 10,000 business miles in 2025/26, then 25p after that. These approved mileage rates are unchanged and continue to apply, so there is no separate higher rate to plan for. Software that logs each trip saves you reconstructing journeys at year end. You can estimate the relief with our mileage calculator.
Features you can usually ignore
- VAT returns, unless you somehow exceed the £90,000 threshold, which is rare for childminders.
- Payroll, unless you employ an assistant. If you do, you will need PAYE and pension features, which our payroll service can handle for you.
- Multi-currency, stock and invoicing automation built for product sellers.
- Project tracking and complex reporting aimed at agencies and contractors.
A childminder paying for a top-tier plan loaded with VAT and inventory tools is usually overpaying. Match the plan to the job.
Is software enough, or do you still need an accountant?
Software records what you tell it. It will not decide whether you are inside MTD, whether the agreement still applies to you, or how to apportion a cost fairly under the standard rules. Those judgements are where childminders most often go wrong, especially now the rules have split into MTD and non-MTD treatment.
In practice, the mistake we see most is a childminder cheerfully claiming the 10% wear-and-tear figure a year after entering MTD, when they are no longer entitled to it. Good software will happily let you enter the wrong number. A person who knows the childminding rules will catch it.
That is the gap we fill. We set the software up so it fits childminding, keep you on the correct side of the MTD line, and review the figures before they reach HMRC. You can read more about how we support self-employed clients on our sole trader accountancy page, and our bookkeeping service can run the records for you if you would rather not.
Frequently asked questions
Do childminders need MTD-compatible software?
Only once you are inside MTD for Income Tax. That happens when your combined gross income from self-employment and property is over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, or over £20,000 from 6 April 2028. Below those thresholds you are not yet mandated, but choosing MTD-ready software early avoids switching later.
Can childminders still use a spreadsheet?
If you are not in MTD, yes, a spreadsheet is fine. Once you are inside MTD for Income Tax you must keep digital records and file quarterly through compatible software, so a plain spreadsheet only works if it links to HMRC through bridging software. Most childminders find dedicated software simpler at that point.
Has the 10% wear-and-tear allowance been scrapped?
Not for everyone. After the 18 March 2026 update to HMRC's guidance, childminders inside MTD for Income Tax can no longer use the 10% wear-and-tear deduction or the household percentages and instead use actual, apportioned costs. Childminders not within MTD may continue using the agreement.
Do I need to record income from Tax-Free Childcare and funded hours?
Yes. Money you receive for childminding is taxable trading income, whether it comes directly from parents, through Tax-Free Childcare, or as local authority funding for government-funded places. Your software should capture all of it, and our self-assessment service can make sure it is reported correctly.
Should a childminder register for VAT in their software?
Almost never. VAT registration is only compulsory once taxable turnover exceeds £90,000, which very few childminders reach. You can leave VAT features switched off and focus on income and expense recording on the cash basis.
Talk to a bookkeeping specialist →
Key takeaways
- Pick software that is MTD-ready, supports the cash basis, and lets you record home, food and wear-and-tear costs with notes.
- Ignore VAT, payroll and inventory features unless you genuinely need them. Most childminders do not.
- The 18 March 2026 HMRC change means childminders inside MTD lose the childminder-only shortcuts and move to actual, apportioned costs.
- Childminders not yet in MTD can still use the BIM52751 agreement, so your software should let you record either way.
- Software records, it does not judge. The rules now split by MTD status, so a quick professional check pays for itself.
Want help choosing and setting up MTD-ready software that actually fits childminding? Book a free 20-minute call with a Zmartly accountant and we will get your books and your MTD position right. Visit our sole trader accountancy page to get started.
