HMRC has published updated guidance for self-employed childminders, clarifying how expenses should be claimed, how records should be kept and how the transition to Making Tax Digital (MTD) for Income Tax will affect the sector.
While many of the familiar tax reliefs remain available, the way some expenses are calculated and evidenced will change for childminders who come within M .jpg)
What Has Changed?
The updated guidance confirms that childminders who are required to use Making Tax Digital will generally follow the same expense and record-keeping rules as other self-employed businesses.
Childminders who are not yet within MTD can continue to use the existing simplified methods if they wish.
Expenses Under Making Tax Digital
Wear and Tear
Previously, many childminders claimed a fixed 10% wear and tear deduction.
Under MTD, this simplified deduction is no longer available. Instead, childminders should claim the actual business cost of buying, repairing or replacing household items and furniture, using a reasonable business proportion where items are used privately as well.
Household Costs
Household expenses such as:
- Gas and electricity.
- Council Tax.
- Water.
- Rent or mortgage interest (where applicable).
can still be claimed.
For childminders within MTD, claims should be based on a reasonable business proportion rather than the historic simplified percentage method. Childminders outside MTD may continue using the existing agreed calculation methods.
Food, Drink and Other Business Costs
You can continue to claim allowable business expenses such as:
- Food and drink provided to the children in your care.
- Toys and educational materials.
- Safety equipment.
- Stationery.
- Business insurance.
- Telephone costs relating to the business.
The main difference under MTD is that expenses should generally be based on the actual business cost where appropriate.
Record Keeping
For childminders within Making Tax Digital:
- Digital records of income and expenses must be maintained.
- Quarterly updates will generally need to be submitted to HMRC using compatible software.
- A final annual declaration will still be required.
Childminders who are not yet within MTD can continue using a cashbook and attendance register under HMRC’s existing arrangements.
Receipts
HMRC’s guidance states that childminders outside MTD should generally keep:
- Receipts for business expenses of £10 or more.
- Receipts where several smaller purchases together total £10 or more.
Receipts are not generally required for:
- Food and drink provided to children.
- Individual items costing less than £10.
What Does This Mean?
The changes are intended to bring childminders within MTD into line with the wider self-employed tax system.
While the way expenses are calculated and recorded may change, childminders can still claim tax relief for allowable business expenses. In many cases, claiming actual costs may even provide greater tax relief than the previous simplified methods.
How Business Management Consultation Can Help
At Business Management Consultation, we can help you:
- Understand which rules currently apply to your business.
- Review your expense claims.
- Set up compliant digital record-keeping systems.
- Prepare for Making Tax Digital.
- Ensure your tax returns remain accurate and HMRC compliant.
Preparing early can make the transition to MTD much smoother.
Conclusion
HMRC’s updated guidance does not remove tax relief for childminders, but it does change how many expenses are calculated and recorded for those within Making Tax Digital. Understanding whether the new or existing rules apply to you is essential to claiming the correct tax relief and remaining compliant.
Call us today on 01273 777 333 to discuss how the updated childminder guidance and Making Tax Digital may affect your business.
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