If you childmind from home, you have probably relied for years on HMRC's simple shortcuts: a flat percentage of your household bills based on the hours you work, plus 10% of your income for wear and tear. Those shortcuts are now changing for some childminders.
Making Tax Digital for Income Tax (MTD for Income Tax, or MTD ITSA) is being phased in from 6 April 2026. And on 18 March 2026 HMRC rewrote its childminder expenses guidance to confirm something important: once you are inside MTD, you can no longer use those bespoke childminder shortcuts.
This guide explains who is affected, when, and exactly what changes about the way you claim expenses and keep records. We will keep it plain, dated, and grounded in the current HMRC pages.
What is Making Tax Digital for Income Tax?
MTD for Income Tax is HMRC's new way of reporting self-employment and property income. Instead of one Self Assessment return a year, you keep digital records and send quarterly updates to HMRC using compatible software, then finalise everything once a year.
In short, you do three things: create digital records of your income and expenses, send quarterly updates through software, and submit a final tax return. The annual deadline of 31 January still applies for the final declaration and payment, but the rhythm of reporting through the year is new.
It does not change how much tax you pay on a given profit. It changes how you record, calculate and report that profit, and for childminders it removes some long-standing shortcuts.
When do childminders have to start using MTD?
This is phased in by income, and the date that catches you depends on your "qualifying income". HMRC defines qualifying income as "the total income you get in a tax year from self-employment and property", assessed on a "gross income (income before you deduct expenses, also called your turnover)" basis. Crucially, it combines all your self-employment and property income, not just childminding.
| Qualifying income (gross) | Based on tax year | You must use MTD from |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
So the first wave, from 6 April 2026, catches childminders whose gross income (turnover, before expenses) from all self-employment and property was over £50,000 in the 2024/25 tax year.
A point that trips people up: it is gross income, not profit. A childminder running at, say, £52,000 turnover but a much smaller profit after expenses is still measured on the £52,000. If you also let a property or have a second trade, those add to the total.
If your qualifying income is below these thresholds, you are not mandated yet, and you keep filing Self Assessment as normal. The bespoke childminder methods below still apply to you for now.
What exactly changes for childminders under MTD?
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Here is the heart of it. HMRC's childminder expenses guidance, published 18 March 2026, now sets out two different sets of rules: one for childminders who use MTD for Income Tax, and one for those who do not. The childminder-specific manual, BIM52751, puts it bluntly: "From April 2026 this guidance does not apply to childminders within MTD. Childminders within MTD should follow the rules for expenses and record-keeping that apply to all other businesses."
In practice, three things change once you are inside MTD.
You lose the hours-based percentage method for household costs
Outside MTD, you can claim a set percentage of your household running and fixed costs based on the hours you work. Inside MTD, you instead "claim for a business percentage of household costs" and, in HMRC's words, "you'll need to find a reasonable method" of working that out, the same as any other home-based business.
You lose the 10% wear-and-tear deduction
Outside MTD, a childminder can "claim 10% of your income from caring for children in your own home for wear and tear of your household items and furniture". Inside MTD, that flat 10% is gone. Instead you "claim for the actual amount you spent on buying, repairing or replacing household items and furniture", apportioned to business use.
You lose the estimated-food shortcut
Outside MTD, you can claim "the estimated cost of food and drink you provide to the children" without keeping every receipt. Inside MTD, you "claim for the actual amount you spend on food and drink you provide to the children", which means tracking and recording it like any other expense.
The headline, then, is not that childminders stop getting tax relief. HMRC is clear you still claim relief on genuine business costs. It is that the simplified, childminder-only estimates are replaced by actual-cost claims and a reasonable business-use apportionment.
What do the old childminder percentages look like?
If you are not yet in MTD, these are the rules that still apply to you, and it is worth understanding them so you can see what you are moving away from.
The percentage of household running and fixed costs you can claim depends on the hours a week you normally care for children in your own home. At 40 hours or more a week, HMRC lets you claim 33% of your running costs and 10% of your fixed costs. Below 40 hours, you scale it down pro-rata.
| Hours cared for per week | Running costs | Fixed costs |
|---|---|---|
| 10 | 9% | 3% |
| 15 | 13% | 4% |
| 20 | 17% | 5% |
| 25 | 21% | 7% |
| 30 | 25% | 8% |
| 35 | 29% | 9% |
| 40 or more (full time) | 33% | 10% |
On top of that, outside MTD you can add the 10% wear-and-tear deduction and use reasonable food estimates. For receipts, the non-MTD rule is that you keep receipts for business expenses of £10 or more, and you do not need them for individual items under £10 or for the food and drink you provide.
These are the shortcuts that disappear the moment you are mandated into MTD. They remain valid for everyone below the threshold until their own start date arrives.
How do you claim household costs once you are in MTD?
Once you are in MTD, you move to the standard home-working approach: work out a fair, defensible business percentage of each household cost and claim that.
There is no single prescribed formula. HMRC simply asks for "a reasonable method". In practice that usually means apportioning by the rooms used for childminding and the proportion of time they are used for the business, then applying that to bills such as heating, electricity, water and similar.
Illustrative example. Priya, a full-time childminder, is mandated into MTD from 6 April 2026. Before, she would have claimed 33% of her running costs as a flat figure. Now she records her actual household bills for the year and works out that the rooms she uses for childminding, for the hours she uses them, represent a reasonable 20% business proportion. She claims 20% of those bills, supported by her records, rather than the old 33% shortcut. Your own percentage will depend entirely on your home and your hours, so do not copy a figure; work out your own and keep the workings.
This is more record-keeping than the flat percentage, but it can be more or less generous than the old method depending on your actual costs and usage. There is no one-size answer, which is exactly why keeping good records matters.
What records will you need to keep?
Under MTD, the expectation is "digital records of your self-employment income and expenses following Making Tax Digital for Income Tax rules". That means capturing each transaction digitally, in compatible software, rather than relying on a paper cashbook and end-of-year estimates.
For childminders moving across from the old system, the practical shift is:
- Income and expenses recorded digitally, transaction by transaction, in MTD-compatible software.
- Actual food costs tracked, not estimated.
- Actual household-item costs recorded and apportioned, instead of the flat 10% wear-and-tear figure.
- A clear, reasonable basis for your household-cost business percentage, kept on file.
- Quarterly updates sent to HMRC through your software, with a final declaration after the tax year end.
Good bookkeeping stops being a once-a-year scramble and becomes a steady habit. If that feels daunting, getting a simple system in place before your start date is the single most useful thing you can do. Our bookkeeping services are built for exactly this kind of transition.
Will your tax bill go up under MTD?
Not automatically. MTD changes how you report and how you calculate expenses, not the tax rates that apply to your profit.
Childminders are taxed as self-employed sole traders. For 2025/26, the personal allowance is £12,570, so profits up to that level are generally free of Income Tax, with the basic rate of 20% applying above it within the basic-rate band. Class 4 National Insurance applies at 6% on profits between £12,570 and £50,270 for 2025/26. Those figures are unchanged by MTD.
What can change is your taxable profit, because your expense claim is now built from actual costs and a reasonable apportionment rather than the old flat percentages. For some childminders the actual-cost method gives a larger deduction; for others, smaller. The only way to know is to keep the records and do the sum.
If you want to sense-check the tax on a given profit figure, our self-employed tax calculator gives you a quick estimate for the current year.
How should childminders prepare now?
If you might be in the first wave, the practical steps are straightforward.
First, work out your qualifying income. Add up your gross self-employment and property income (turnover, before expenses) for the relevant tax year and compare it to the thresholds above. Remember it is everything combined, not just childminding.
Second, if you are mandated, choose MTD-compatible software and start recording digitally well before your start date, so the habit is in place.
Third, switch your mindset on expenses from estimates to actuals. Start keeping food receipts, household-item receipts and a sensible record of how you use your home for the business.
Fourth, if you are below the threshold, you can keep using the bespoke percentages and the 10% wear-and-tear for now, but it is worth understanding the new rules so the eventual switch is smooth.
Childminding has its own quirks, and the March 2026 change is a genuine break from how the sector has worked for years. If you would like a hand getting MTD-ready without the jargon, take a look at our dedicated support for childminders, or book a call and we will walk you through your specific situation.
Childminder MTD FAQs
Do all childminders have to use Making Tax Digital from April 2026?
No. Only childminders whose qualifying income (gross self-employment and property income, before expenses) was over £50,000 in 2024/25 must use MTD from 6 April 2026. The threshold drops to over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028. Below those levels, you keep filing Self Assessment as normal for now.
Can childminders still use the 10% wear-and-tear allowance under MTD?
Not once you are inside MTD. HMRC's guidance, updated 18 March 2026, confirms that childminders in MTD claim the actual amount spent on buying, repairing or replacing household items rather than the flat 10% of income. The 10% wear-and-tear deduction remains available only to childminders who are not yet in MTD.
Do the hours-based household cost percentages still apply?
They still apply to childminders who are not in MTD, including the 33% of running costs and 10% of fixed costs at 40 or more hours a week. Once you are in MTD, you instead claim a reasonable business percentage of your actual household costs, the same as other home-based businesses.
Is qualifying income based on profit or turnover?
Turnover. HMRC assesses qualifying income on gross income, before you deduct any expenses. It also combines all your self-employment and property income, so a childminder with a second trade or rental income counts the lot.
Does MTD change how much tax childminders pay?
MTD does not change the tax rates or allowances. For 2025/26 the personal allowance is £12,570 and basic-rate Income Tax is 20%. What can change is your taxable profit, because expenses are now claimed on an actual-cost basis instead of the old flat percentages, which may be more or less generous depending on your costs.
What is the trading allowance and does it still help?
The trading allowance is a tax exemption of up to £1,000 a year for trading income. If your gross trading income is £1,000 or less you may not need to tell HMRC at all. If it is more, you can deduct up to £1,000 instead of your actual expenses. For most working childminders, claiming real expenses gives a far bigger deduction than £1,000, so the allowance rarely helps once you are minding regularly.
