Childcare.co.uk met with HMRC to talk about childminders, MTD and expenses

On 19th January 2026, Childcare.co.uk had an exclusive meeting with HMRC to talk about childminders, MTD, expenses and the historic 'childminder agreement'.

Here is a summary of things we discussed with HMRC and our understanding of the changes. This is purely a report of our discussion and not accountancy or tax advice.

Making Tax Digital (MTD) is a government initiative designed to make HMRC record keeping easier. The self-employed and landlords, whose total income is over a set amount, will be expected to use approved software to manage their tax and report their figures quarterly to HMRC. The aim is to reduce errors in tax returns and make tax reporting simpler because you will be calculating your income and expenses more regularly. The amount of tax you pay will not change.

The current HMRC Business Income Manual (BIM 52751) that most childminders use will no longer apply once you move onto MTD. This means that there will be a new way of accounting that might seem quite different to start with, but HMRC are keen to reassure childminders that once you’ve worked out your expenses and percentages, you will be able to use them for your calculations for the future.

When do I need to start using MTD?

Sole trader childminders must switch to using MTD between 6th April 2026 and 6th April 2028 depending upon their income.

• If your total self-employed income (from all sources, childminding and anything else) is over £50,000 you must use MTD from 6th April 2026.

• If your total self-employed income (from all sources, childminding and anything else) is between £30,000 and £50,000 then you must use MTD from 6th April 2027.

• If your total self-employed income (from all sources, childminding and anything else) is between £20,000 and £30,000 then you must use MTD from 6th April 2028.

Why has the previous BIM 52751 ('the agreement') been terminated?

MTD is rolling out and there is a requirement for all self-employed businesses to keep digital records and file quarterly reports. HMRC are aiming to standardise the approach to record keeping for all self-employed people.

HMRC state that they are limiting the impact of changes by only introducing them alongside MTD. Childminders not required to use MTD, may still keep using the allowances set-out in the agreement

What does this mean?

It means all the specific allowances detailed in 'the agreement' will cease when you move over to MTD, notably the 10% wear and tear and allowance and the specific allowances detailed in the agreement for things like heating, lighting, water rates, council tax and rent. HMRC say the agreement is "old" and has actually been in place since 1986. They say the childminding industry has developed and changed, with many childminders now working from non-domestic premises that aren't their home. This means many aspects of the agreement are dated and do not apply to everyone.

Can the decision be overturned?

HMRC are changing legislation through parliament for MTD, and they state that this is the decision that has been taken and is unlikely to change. The changes were first detailed in the November 2025 budget, with further details described in an HMRC policy paper published in December 2025.

How do I know if my income meets the threshold for MTD?

Qualifying income is turnover taken from all self-employed sources: childminding, property income and any other self-employed activities.

Both childminding income and any other property income or self-employed income will be added together to calculate whether you have to move onto MTD.

Income covers everything you receive for your childminding service – you will need to record every payment, the date received, who it was from and the total in your chosen MTD software. Some of the software options link to your banking which might make this easier.

With the loss of the childminding BIM for those moving to MTD, especially the current 10% wear and tear allowance, childminders have been asking Childcare.co.uk about how they can claim expenses. You will still need to track every expense for your childminding business including, for example, books, games, art and craft supplies, food for the children, outings expenses, utilities and other costs.

There are many ways instead of the 10% wear and tear allowance that childminders can use to receive tax relief on expenditure. Just remember to keep a record of every transaction you make including the date and receipt or other supporting documents. Some MTD approved software, including mobile apps, store receipts digitally, with the intention of making record keeping easier.

Claiming expenses for items in your home

Instead of the wear and tear allowance, you will be able to claim for the actual costs of items purchased for your childminding business.

In some cases you will be able to claim 100% of the cost, for example if you buy something required for your business, that is wholly and exclusively used by it. This might be something like a highchair, if you do not also use it for your own children.

In other cases, you will have items in your home, that are used by both your childminding business and yourself personally. In these cases, you will be able to claim a proportion of the costs, based upon the split of how much business and personal usage there is.

For example, how do you claim expenses for a sofa that is dual use? HMRC advise that the onus is on the individual childminder to decide the percentage split they are going to apply. HMRC state that you need to be reasonable and consistent, whatever % you choose to use.

HMRC have guidance on expenses for the self-employed on their website and are looking to produce further specific guidance for childminders.

You will find examples of how to work out expenses for the cost of laptops and mobile phone bills for self-employed use on the HMRC website. The same principles apply to items purchased for use partly in your childminding business, such as furniture and flooring.

Household expenditure and bills

The current BIM table for childminders gives examples of the percentages you can currently claim for heating, lighting, water rates, council tax and rent, depending on how many hours you work a week. Those specific numbers will no longer be set in stone with MTD. You will need to estimate your own reasonable business usage. This might end up being the roughly the same, smaller, or larger than the current percentages.

You can calculate your estimates based on the area in your home you use for your childminding purposes compared to the total area of your home.

You might already have floor plans of your home showing the square footage of each room, or if your rooms are of a similar size, you could use a more basic calculation.

For example, you might have 8 rooms in your home and might use 4 of them for childminding purposes (you can't include a bathroom, hallway or landing).

In that example, 50% of your home is used for business purposes when you are working.

However, you can't claim 50% of your heating and lighting costs, because you are not using the rooms for business all the time and you are not open every day of the year.

You would also need to take into account, how many hours you work per day, the number of days you work in a week and the number of weeks you are open per year.

The calculations can be complicated (and we agree) but HMRC agreed with us that it would probably not be unreasonable for a childminder to simplify things and continue to use the numbers detailed in the BIM table in many cases.

HMRC say you may also be able to claim a percentage of your mortgage interest (not the capital repayments) as this is considered similar to rent. However, you should take your own advice on whether this is appropriate as some people have reported this may effect your capital gains tax position when you come to sell your property in the future.

You can usually claim a reasonable % for repairs or replacements, for example, replacing a toilet seat in a bathroom used by children. However, if a childminded child breaks the toilet seat or smashes the toilet window you will need to replace them and HMRC state that it would be reasonable to claim 100% of the cost in some cases, if the breakage was solely as a result of a child attending your childminding business and not just general wear and tear.

You will be expected to keep records that explain what you have claimed, and how you have made your estimates or calculations, in case HMRC query your tax returns. For example, you might decide to keep a photo of damage caused by a childminded child to explain why you have replaced the item.

Some household costs such as council tax, rent and mortgage interest are considered fixed costs, which would not change even if you weren't running a business, so HMRC say you should generally claim a lower percentage for these. This was the case in the agreement, where utility bills could be claimed at up to 33%, whereas water rates, council tax and rent could be claimed at up to 10%. HMRC agreed that continuing to use 10% for these items would likely to be deemed reasonable in most cases for those working 40+ hours a week.

The important thing is to show you have taken 'reasonable care' when estimating your expenses. You should not deliberately overinflate numbers, but HMRC say they are reasonable don't expect estimates to be absolutely precise. HMRC can issue penalties if your returns are widely incorrect due to them deeming you have not taken reasonable care. If you have taken reasonable care but you have made a genuine mistake, you are unlikely to receive a penalty, but may have to pay interest on any additional tax owing

You can read more about claiming a proportion of your costs on the If you work from home section of the 'Expenses if you're self-employed' page on the HMRC website.

We will be working with HMRC to produce further guidance on how to calculate estimates for your household expenditure, together with examples.

Food and drink

Childminders can currently make a reasonable estimate and don’t need to keep receipts for food and drink used for personal and business purposes.

When using MTD, HMRC will expect you to keep receipts for food and drink and put them through your MTD software. A reasonable approach for claiming expenses will be to estimate a percentage of the food bill for the children in your care. For example, if you weren’t childminding your food costs might be £150 a week but because you are childminding they might be £200 a week. Alternatively, it may be considered reasonable to estimate a percentage of your total food spend for childminding use. Again, you need to be fair and reasonable with your estimates and should be prepared to show your reasoning to HMRC if questioned.

Expenses under £10 with no receipt

You will need receipts for MTD where possible, but if you don’t have one, for a small purchase, HMRC state that you can still record the expense within the MTD software you are using.

HMRC say they understand that it isn't always possible to get a receipt for every small purchase, due to the nature of a childminder's work and where they might visit.

They also advise that you can continue to use your current record keeping method and write down your expenses and then add the expenses to a digital record. The 'under £10 no receipt limit' will no longer be in place for MTD, but if you are inspected, HMRC are not going to ask to see individual receipts for every small purchase as long as you have recorded reasonable expenses that are clearly for childminding.

Car expenses

The expenses of 45p / mile for up to 10,000 miles and 25p / mile over 10,000 miles are a statutory allowance that is not changing.

Childminders can alternatively work out the actual costs and apportion it for business and personal use. Most childminders will likely continue to find it easier to use 45p / mile expense.

I'm not required to use MTD. Can I still use the alternative method of claiming expenses, rather than the agreement?

If your turnover is below the MTD threshold, HMRC state that you can change how you do your accounts to this new way of working and you do not have to use the current BIM for childminders.

You might find your own ways of working out expenses using the standard self-employed allowances are more beneficial to the old agreement.

Next steps

If you are moving to MTD in April 2026 because your total income (before expenses) is more than £50k (combined self-employed and landlord income) you will need to choose the right software for you and start entering your income and expenses ready to make your first MTD submission.

Every childminder has unique circumstances. If you are unsure, you should take advice from a qualified accountant about your business or personal tax needs.

You should always take professional accountancy, legal and taxation advice. You can also contact HMRC for assistance

We will share further updates on this as soon as we receive them.