If you look after other people's children for money, you're running a business in HMRC's eyes. That means tax can apply, even though you work from your own home and even if it feels more like a vocation than a job.
The good news is that most childminders pay far less tax than they expect. There are generous, childminder-specific rules for expenses, a tax-free allowance most people don't use, and a personal allowance that covers a chunk of your income before any tax is due.
This guide explains, in plain English, when childminders pay tax, how much, what you can deduct, and the big change to childminder expenses that started on 6 April 2026. It's written for self-employed childminders in England, Wales and Northern Ireland. Scotland sets its own Income Tax rates, so a few figures differ there.
So, do childminders pay tax?
Yes, childminders pay tax on their profit, but only once that profit passes the tax-free thresholds. You're self-employed, so you pay Income Tax and National Insurance on what you earn after allowable expenses, not on the full amount parents pay you.
In practice, a lot of part-time childminders end up owing little or nothing, because the personal allowance and childminder-friendly expense rules wipe out most of the bill. The point is that you still have to work it out and tell HMRC, even if the answer is zero.
When does a childminder have to pay tax?
Whether you owe anything comes down to your profit (income minus allowable expenses) measured against two tax-free thresholds.
The first is the trading allowance of £1,000 for 2025/26. This is based on your gross income, the total parents pay you before you take anything off. If your gross childminding income for the tax year is £1,000 or less, you generally don't need to tell HMRC at all.
The second is the personal allowance of £12,570 for 2025/26. This is the amount of total income you can have across the year before any Income Tax is due. For a childminder with no other job, you'd need your taxable profit (plus any other income) to climb above £12,570 before Income Tax kicks in.
So there are three broad situations:
- Gross income £1,000 or less: usually nothing to report, and no tax.
- Gross income over £1,000, but profit under the personal allowance: you must register and file a tax return, but you may owe no Income Tax.
- Profit (with any other income) over £12,570: Income Tax and National Insurance can apply.
One important catch. Even if your gross income is under £1,000, you must register for Self Assessment if you want to claim Tax-Free Childcare based on your self-employment income, want to pay voluntary National Insurance to protect your State Pension, or want to claim Maternity Allowance. We come back to Tax-Free Childcare below.
Which taxes do childminders pay?
As a self-employed childminder, three things can apply once your profit is high enough.
Income Tax. Charged on your taxable profit above the personal allowance. For 2025/26 the bands (for England, Wales and Northern Ireland) are:
| Band | Taxable income (2025/26) | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Most childminders sit comfortably in the basic-rate band or below.
Class 4 National Insurance. Charged on profits between the Lower Profits Limit of £12,570 and the Upper Profits Limit of £50,270 for 2025/26, at 6%, then 2% on profits above £50,270.
Class 2 National Insurance. Since 6 April 2024 there's no flat weekly Class 2 charge. If your profits are at or above the Small Profits Threshold (£6,845 for 2025/26), your National Insurance record is treated as maintained without you paying anything, which protects your entitlement to the State Pension. If your profits are below that, you can choose to pay voluntary Class 2 at £3.50 a week for 2025/26 to keep your record complete.
You do not pay VAT on childminding fees, and as a sole trader you don't pay Corporation Tax (that's a company tax). The vast majority of childminders are sole traders, which is almost always the right structure here.
What can childminders claim as expenses?
This is where childminders get a genuinely good deal compared with most sole traders. You only pay tax on profit, so the more legitimate costs you deduct, the lower your bill.
Typical allowable costs include:
- Toys, books, craft materials, and play equipment.
- Food and drink you provide for the children.
- Ofsted (or Childcare Approval Scheme) registration fees.
- Public liability insurance.
- Enhanced DBS checks and paediatric first-aid training.
- A share of your household running costs, such as heating, lighting, water and council tax.
- Wear and tear on your furniture and household items.
- Car costs for outings and school runs, usually via simple mileage at 45p per mile for the first 10,000 business miles, then 25p.
- Subscriptions to a childminding association, accountancy fees, and stationery.
For decades, HMRC has let childminders use a simple, bespoke method to work out the home-based costs, set out in its manual BIM52751 and originally agreed with the National Childminding Association (now PACEY). Under that long-standing agreement:
- You can claim a percentage of your household running costs (heating, lighting, water rates, council tax, rent) based on the hours you childmind. At 40 or more hours a week this is up to 33%, scaled down for fewer hours.
- You can claim a percentage of fixed costs on the same hours basis, up to 10% at 40+ hours a week.
- You can claim 10% of your total childminding income as a wear-and-tear allowance for furniture and household items.
- You can use reasonable estimates for the food and drink you provide without keeping every receipt, and you don't need receipts for individual items costing less than £10.
These percentages and the no-receipts approach for food are the rules many childminding courses still teach. But for some childminders they're changing, which is the next section.
What changed for childminder expenses in April 2026?
This is the part to get right, because a lot of older advice online is now out of date.
On 18 March 2026, HMRC updated its childminder guidance in BIM52751. The headline is that the bespoke childminder method is being phased out, but only for childminders who have entered Making Tax Digital for Income Tax (MTD for Income Tax).
Here's how HMRC's manual now puts it: from April 2026, the childminder expenses guidance does not apply to childminders who are within MTD for Income Tax. Once you're inside MTD, you must use the standard self-employment rules to work out your profit. In practice that means:
- The hours-based percentages for running costs and fixed costs no longer apply. Instead you work out the genuine business share of your household bills (standard apportionment), or use HMRC's flat-rate simplified expenses where eligible.
- The 10% wear-and-tear allowance is no longer available. Instead you deduct the actual cost of buying, repairing or replacing the household items you use in your childminding.
If you are not yet within MTD for Income Tax, the long-standing childminder method, including the percentages and the 10% wear-and-tear allowance, still applies to you for now.
So who is "within MTD"? MTD for Income Tax is being phased in by income level. You're brought in based on your qualifying income, which is your combined gross self-employment and property income:
| You're brought into MTD from | If your qualifying income is over | Based on the tax year |
|---|---|---|
| 6 April 2026 | £50,000 | 2024/25 |
| 6 April 2027 | £30,000 | 2025/26 |
| 6 April 2028 | £20,000 | 2026/27 |
Most childminders earn well under £50,000 gross, so they aren't affected in 2026 and may not be for some time. But it's worth knowing the direction of travel, because the threshold is dropping to £20,000 from April 2028. If your gross income is creeping up, the older "just claim 10% wear and tear" advice may not apply to you for much longer, and you'll want to start keeping fuller records of your actual costs.
This area is moving quickly and the detail matters, so it's worth getting a steer specific to your numbers. Our accountants for childminders keep on top of exactly these changes.
How much tax will I actually pay? An illustrative example
Illustrative example. Sophie is a full-time registered childminder in Cardiff for the whole of 2025/26. She is not yet within MTD for Income Tax, so she can use the long-standing childminder method. She has no other income.
- Gross childminding income: £24,000
- Food, toys, insurance, registration, training and mileage: £4,000
- Household running costs claimed (she works 45 hours a week, so up to 33%): £1,200
- Wear-and-tear allowance (10% of £24,000): £2,400
Her total allowable expenses are £4,000 + £1,200 + £2,400 = £7,600.
Her taxable profit is £24,000 minus £7,600 = £16,400.
Now the tax, for 2025/26:
- Income Tax: profit above the £12,570 personal allowance is £16,400 minus £12,570 = £3,830, taxed at 20% = £766.
- Class 4 National Insurance: profit above the £12,570 Lower Profits Limit is £3,830, charged at 6% = £229.80.
- Class 2 National Insurance: her profit is above the £6,845 Small Profits Threshold, so her record is treated as maintained and there's nothing to pay.
Sophie's total bill for the year is £766 + £229.80 = £995.80.
That's well under 5% of what parents paid her, which surprises a lot of new childminders. The figures are illustrative, but they show how much the expense rules pull the bill down. Change any number and the result changes, so always work it out on your own figures.
Want to sanity-check your own numbers? Try our self-employed tax calculator for a quick estimate.
Do I pay tax on funded hours and Tax-Free Childcare?
Two common sources of confusion here. The short version: the money you receive is part of your trading income, but the schemes parents use are not extra taxable income on top.
Funded hours. When you deliver government-funded early-years places (the free hours for eligible children, now available from 9 months old following the September 2025 expansion), the funding you receive is ordinary trading income. You include it in your gross income alongside private fees, and your expenses come off in the normal way. It is not tax-free, but it's not taxed any differently from your other fees.
Tax-Free Childcare. This is a scheme for the parents, not for you. A parent pays into a government childcare account, the government tops it up, and the parent pays you from that account. From your side, it's simply a payment for your services, so it counts as part of your gross income, exactly like a bank transfer or cash would. You don't get taxed twice and there's nothing special to report.
The one thing to watch: if you want to claim Tax-Free Childcare for your own children based on your self-employment income, you must be registered for Self Assessment, even if your childminding income is below the £1,000 trading allowance.
How and when do I tell HMRC?
If your gross childminding income is over £1,000, you need to register for Self Assessment and file a tax return.
- Register by 5 October following the end of the tax year you started. So if you started childminding in 2025/26 (the year ending 5 April 2026), register by 5 October 2026.
- File online and pay any tax due by midnight on 31 January following the tax year. For 2025/26, that's 31 January 2027.
- Keep your records (income and expenses) so you can complete the return accurately. Good, simple bookkeeping throughout the year makes this painless.
If you'd rather not wrestle with the rules, the percentages, and the MTD changes on your own, that's exactly what we do. Zmartly handles registration, bookkeeping and your tax return so you can focus on the children, not the paperwork.
Want childminder tax sorted properly? Talk to a Zmartly accountant for childminders and get a fixed-fee quote.
Frequently asked questions
Do childminders pay tax on cash payments?
Yes. All the money parents pay you counts as income, whether it's cash, bank transfer, or paid through Tax-Free Childcare. You pay tax on your profit (income minus allowable expenses) once it passes the tax-free thresholds, regardless of how you were paid.
How much can a childminder earn before paying tax?
For 2025/26, you can earn up to £1,000 gross without usually needing to tell HMRC, thanks to the trading allowance. Beyond that, you pay no Income Tax until your taxable profit, plus any other income, exceeds the £12,570 personal allowance.
Do I still get the 10% wear-and-tear allowance?
It depends on whether you're in Making Tax Digital for Income Tax. If you're not yet within MTD, the 10% wear-and-tear allowance still applies. Once you enter MTD (from April 2026 for those with qualifying income over £50,000, dropping to over £20,000 from April 2028), you can no longer use it and instead deduct the actual cost of the household items you use for childminding.
Are funded hours and Tax-Free Childcare taxable?
Funded-hours payments are ordinary trading income and form part of your gross income. Tax-Free Childcare is a scheme parents use to pay you, so the amount you receive is also part of your gross income. Neither is taxed differently from your normal fees, and you're not taxed twice.
Do childminders pay National Insurance?
If your profit is at or above the Small Profits Threshold (£6,845 for 2025/26), your National Insurance record is treated as maintained at no cost. You pay Class 4 National Insurance at 6% on profits above £12,570. Below the threshold, you can pay voluntary Class 2 at £3.50 a week to protect your State Pension.
Do I need to register if I earn under £1,000?
Usually no, the trading allowance covers you. But you must still register for Self Assessment if you want to claim Tax-Free Childcare for your own children based on self-employment income, pay voluntary National Insurance, or claim Maternity Allowance.
