Childminding UK: Childminding Accounts Made Simple

Childminding Accounts Made Simple

Becoming a self-employed childminder can be a very exciting, rewarding and lucrative career but it can also feel overwhelming, especially when it comes to managing your childminding accounts and filing your HMRC self-assessment return. This guide aims to reassure you about this element of running your childminding business.

Income Affects what you need to do

Your income will determine which method you use to report your income and expenditure, and this guide will go through each for you.

From April 2026 the way that self-employed people (and landlords), including childminders, will need to record and report income will be changing over a three-year period.

1. Making Tax Digital (MTD) eligibility

From April 2026, those with income of over £50,000 for the 2024 to 2025 tax year will need to use MTD
From April 2027, those with income over £30,000 for the 2025 to 2026 tax year will need to use MTD
From April 2028, those with income over £20,000 2026 to 2027 tax year will need to use MTD
There are no plans at present for those with income under £20,000 to use MTD

HMRC will contact those that they believe are due to move to MTD to inform you to sign up, but advise that if you don’t hear, you will need to sign up using the same user ID and Password you set up when you register for self-assessment.

Some people are exempt from MTD and there are different reasons why you may be exempt. For example you may be digitally exempt or not have a National Insurance Number. Some exemptions are temporary and others permanent as listed.

2. Cash Basis Accounting- for those not using MTD

For those whose income is underneath the MTD thresholds, there are special arrangements for childminders, and we hope that the information provided below can reassure anybody considering becoming a childminder how simple the process can be. Being a childminder means that you’re self-employed as a sole trader. As a sole trader, you are the sole owner and operator of your business, and this means you are responsible for paying any tax owed.

Applicable for everyone

Registering as self-employed with HMRC

As soon as you register as a Childminder it is important to register with HMRC for self-assessment and class 2 national insurance contributions. You need to be registered in order to accept Tax Free Childcare Payments from parents if you are providing government funded places for children over 9 months of age.

To register you will need a Government Gateway user ID and password to sign in through your business tax account. Please click here for more information about how to do this. You will receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days and you will need this to be able to access your self-assessment forms each year and submit them to HMRC.

You will then receive reminder letters or emails telling you to complete a self-assessment tax return before it’s due. A tax return must be completed and submitted if, in the last tax year (6^th April to 5^th April), you were self-employed as a ‘sole trader’.

Employing an Accountant

Most childminders do not employ an accountant but complete their business accounts themselves.

Important Deadlines

At the end of each tax year (6^th April to 5^th April), HMRC will ask you to complete a self-assessment. The deadlines to complete your forms are as follows:

Register for self-assessment by 5^th October if you need to complete a tax return for the previous year
Paper Tax Returns by midnight 31^st October
Online Tax Returns by midnight 31^st January
Pay the Tax you Owe by midnight 31^st January
2^nd payment deadline where you can make advance payments towards your next year’s tax bill is 31^st July

If you are late filing your tax return or paying your tax you will be charged a penalty.

Pre-registration costs

Any setting up costs can be claimed in the first year’s self-assessment including:

Training including Introductory and Paediatric First Aid Training Course
Any travel entailed e.g. to attend training
Ofsted registration fee
DBS Certificates
Health Declaration Form
Toys
Resources
EYFS support and recording materials
Equipment
Health and safety equipment
Any other costs that you may have incurred whilst registering as a childminder.

What is your income/turnover?

Any money you are paid to childmind is your income. This may be:

Money from parents for looking after their children
Money received from your Local Authority for government funded childcare places
Any grants you may have been paid
Money from milk claims
Payments from colleges/universities if you are caring for a child of one of their students.
Care to Learn (care for children of teenage parents)
Social Services/Police

What is your expenditure?

Your expenditure is anything at all that you have paid for because of childminding. This includes expenses that are wholly for childminding such as toys, resources, craft items, outings or completing training, but also includes expenses that are for things used both for childminding and family such as heating and lighting, a shared playhouse in the garden etc.

Do you need to be VAT Registered?

It is unlikely that as a Childminder you would need to be VAT registered because for 2026/2027 tax year, the VAT registration threshold is set at £90,000 and most childminders income is under this amount.

Using Making Tax Digital

Software

You will need to use compatible software that will link to the HMRC. There are both free and paid for versions to choose from. HMRC hasn’t created its own software but has worked with several software companies to ensure that their free versions are MTD compliant.

If you currently use a method of accounting such as using a spreadsheet, you can choose ‘bridging software’ that will enable you to continue to use it.

HMRC say that lots of software has a focus on being easy to use, some have features for scanning receipts and some send reminders of tax deadlines.

Quarterly Updates

Income details will need submitting every quarter, straight from your software. If you log your income and expenses as you go along, HMRC say these updates can be done with a ‘touch of a button’.

These updates aren’t tax returns, but summaries of how your business is doing in each quarter. You will be able to see an estimate of your tax bill to help you plan for this.

Quarterly Update Dates

Below are the standard update periods

Update period	Update deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May

If you prefer, you can choose to match your update periods to the calendar year. These end on the last day of the month and will make your record keeping simpler if your accounting period ends on 31 March.

You will still submit a tax return, but your software will tally up the whole year from your quarterly updates and create an end of year tax summary for you to make completing your tax return easier.

You can still make any adjustments needed before submitting your tax return, such as including other sources of income like bank interest or pensions. And you can claim tax relief if you’re eligible.

When it is done, click submit and the details will be sent directly from your software.

Childminding Expenses using MTD

For several decades, childminders have had specific allowable expenses that were put in place to ease the admin burden and to reflect that for childminders, there is arguably more wear and tear to a childminder’s home than for other people who work from home.

HMRC says that childminders can still claim all business expenses, including wear and tear, but the way you will claim is different for those on MTD. Childminding UK has received information about Overarching Principles you can use when making your calculations.

The Overarching Principles are:

When you need to apportion costs between personal and business use, any just and reasonable method will be acceptable. For example, this could be based on area and time use for gas/electricity costs – and this may be much more than the 33% specified in the existing guidance. HMRC do not specify one method as it is unlikely to be suitable for every business
You do not need to do a separate calculation for every single expense so a reasonable percentage for an overall type of expenditure, e.g. food, can be applied to all costs of that type for the year (or multiple years if it remains reasonable)
If you don’t get a receipt for a cost, making a simple note of the expense at the time, for example in your cashbook or a note on your phone, will be perfectly acceptable – date, item/reason, amount. This can then form the basis for creating the digital record for those in MTD. Many business transactions happen without getting a receipt – a receipt isn’t necessary to get a deduction, but it is good evidence of the expense
Apportionment is based on use, not on the immediate reason for the cost. If it helps, consider this: if you use your car partly for business, you would not claim 100% of the repair/towing costs if it burst a tyre on a business journey (or 0% if it was on a personal journey) – the same principles apply when considering a sofa
There is likely to be an element of estimation in every apportionment and this is acceptable. Similarly, rounded percentages are fine, you can use 80% instead of 78.35% etc – we do not require an excessive level of accuracy
Self-employed childminders cannot get a deduction for the value of their own time worked because this is not a cost their business is incurring (they are their business). But they can of course get a deduction for the costs of paying other people to do that work, e.g. an assistant, a cleaner or a decorator

Our HMRC contact also said: ‘I appreciate the level of concern your members have about abiding by tax rules for their business. In short, keeping good (not necessarily perfect) records and being able to justify their method of apportioning costs is in most cases all that is required.’

The above principles can be used for any expense you have that is a shared cost for your family and your Childminding business. Many of our members are telling us that for some household expenses, you will be able to claim more than before, for, example heating and lighting as the 33% cap is not in place for those on MTD.

For wear and tear, you will claim the actual costs of repairing or replacing items, using the overarching principles above, that were claimed under the 10% wear and tear allowance. This means for anything in your home that is used jointly for childminding and your family, the amount will need to be worked out initially, but these calculations will then stand until something in your business changes, such as changes to your working hours. Items such as replacement cushions, rugs, sofas, cooking utensils, kitchen appliances such as toasters and even lightbulbs and dishwasher tablets or roof repairs will be calculated using the same principles.

You can find out more about the government guidance for use of home expenses that also gives some examples, including those for rent, mortgage interest, insurance and broadband. Gordon’s example is probably the closest to a childminders work, but doesn’t include areas you may use as a childminder including your garden, bathrooms and hallways.

Other things to consider:

HMRC have clarified that any just and reasonable method of apportioning business and personal costs will be acceptable
Where in your home you carry out your general admin tasks such as claiming funding, planning for the children, having meetings with parents, completing training etc. This is all business time that you are undertaking because you are a childminder
The use by children and parents of areas such as your hallway and bathroom in your calculations
Costs of any pets you keep just for your minded children or have bought as joint pets with your own family
Additional costs of maintaining your garden e.g. reseeding patches in your lawn (any costs only for childminding such as fencing off a pond can be fully claimed)
If you rent an allotment and use this as a learning experience for your minded children
It is maybe less easy to calculate water usage if your home has a water meter. Consider filling paddling pools and other water play, watering plants, use of washing machine for washing bedding, use of bath or shower after muddy walks or poo escape incidents. For those providing overnight care, water use with additional bathing will be increased
Food preparation for children outside childminding hours. Do you spend time in your kitchen at wekends batch cooking, or time in the morning preparing meals for the day, or in the evening preparing for the next day?

Childminding UK strongly recommends that you make a note of your workings out for different percentages and that you keep this record in case HMRC ask you questions about how you calculated the amounts you are using.

Receipts

HMRC are aware that for many businesses, it isn’t always possible to obtain a receipt for purchases. For childminders, examples include visits to groups or buying items in charity shops, car boot sales or on platforms such as Facebook Marketplace. It is important to make a note of all that you spend, as your software platform will enable you to add this as an expense.

Using Cash Basis Accounting

For several decades, childminders have had had specific allowable expenses that were put in place to ease the admin burden and to reflect that for childminders, there is arguably more wear and tear to a childminder’s home than for other people who work from home, and this method of accounting gives simple calculations for childminders to use, without having to work out actual costs.

HMRC state that:

‘If you run a small business, cash basis accounting may suit you better than traditional accounting.

This is because you only need to declare money when it comes in and out of your business. At the end of the tax year, you will only pay Income Tax on money received in your accounting period.’

Childminding Expenses using Cash Basis Accounting

Food and drink

If you have a child for breakfast, lunch and dinner, you can claim an amount per day that it costs you to feed them. For example, you could claim £8 per child per day for breakfast, lunch and dinner, £6 for lunch and dinner or £4 for breakfast and dinner or £3 for lunch etc. You will need to do some initial costings to work out what those charges are and keep those costings in case HMRC asks to see them. It is important to note that this does not include the cost of fuel for cooking as this is calculated separately. Or you can claim against the actual cost of the food purchased but you can’t do both.

Car expenses

55p per mile can be offset against your income for any journeys taken specifically for childminding (increased from 45p. in April 2026). This will include any journeys used for you attending training.

Other costs

The following items are examples of what you can claim for in expenses:

Ofsted registration fees
Membership to Childminding support organisations such as Childminding UK
Public Liability Insurance premiums
Training relating to Childminding including your Paediatric First Aid Course, Introductory Training Course, Safeguarding Training
Cost of advertising
Computer equipment
Cost of telephone/internet used for childminding purposes
Toys
Resources
Equipment such as prams, buggies, high chairs, car seats
Childminding conferences
Outings to farms, parks, parent/toddler groups, childminding groups. This includes entry fees, fuel costs, ice creams/drinks/snacks purchased for the children whilst there. You would be able to claim for your entry fee and your childminded children but not for your own children.
Books
Safety equipment
Stationery
Travel fares
Wipes, tissues, toilet rolls for childminding
And anything else you buy or pay for that is related to your childminding business

It is important to note that you are not really claiming these costs back as such. You are simply taking the cost of them off your overall income. For example, if your overall income is £20,000 and you spend £3,000, you would declare £17,000 as your profit and this is what you would pay tax on, less your personal allowance. You can find out the current personal allowance here

On the chart below you will see the percentages of your gas, electricity, water and council tax bills you can include as an expenditure. The percentage depends on the number of hours worked each week. For example, if you work 30 hours per week, you are entitled to claim 25% off your heating and lighting and 7% off your water bill and council tax.

Hours Worked

% of Heating and Lighting

% of Rent, Council Tax and Water Rates

12%

17%

21%

25%

29%

33%

10%

In addition to the above, a deduction of 10% of your income can be claimed against wear and tear of your furniture and household items. Take this 10% off your gross income before any other expenses are deducted. HMRC state that ‘this is intended to include household items which are not used wholly and exclusively in childminding. A childminder claiming this deduction may not, however, claim relief for the cost of replacing such household items. Reasonable costs of cleaning household items where the need for cleaning is as a result of childminding activities may be allowed as a separate item’.

Receipts

Providing the cost of an item is under £10, you do not need a keep a receipt. For example, 2 ice creams at £6, would not need a receipt, but buying 5 ice creams for £15.00 would require one. This is to make it easier whilst out and about because parent/toddler groups and ice cream vans are just 2 examples of when receipts are not usually issued. You will need to make a note of these spends so that you can include them in your accounting.

What is capital expenditure?

Capital Expenditure is when you have purchased larger items such as a car, or a large cabin for the garden. These items are expensive to start with but they do decrease in value over the years.

If you wanted to claim for a car rather than using the simplified method of claiming 55p per mile, we would recommend employing an accountant as you would need to file full accounts and use a method called Capital Allowances.

Figures to enter into your tax return?

Provided your income for the year is not above £150,000, the 3 figures you are required to provide on your tax return are:

The total amount of income you have received for the tax year
Your total expenditure
Your total earnings

A simple example is:

Income / Turnover – you earned £20,000

Expenditure is £9600 which comprises:

10% of your income against wear and tear on your home - £2000. This should be taken off before any other expenses.
Amount you can claim for your gas/electricity is 33% - £792.
Amount you can claim for Rent/Council Tax - £191
Other expenditure - £1000

Total Profit is Income/turnover minus all expenditure = £16017 and this is the amount you would be required to pay tax on. However, your personal tax allowance would then be taken into account which, provided you are entitled to the standard personal allowance of £12,570 (tax year 26/27 and subject to change), you would pay tax on £3447.

Please note: the percentages used in this example are for full time childminders The table below shows allowances for part time childminders.

You will need to ensure the money is in your account before including it in your income for the tax year.

If you are a new childminder and still building your business or are considering growing your business by taking on assistants and know that you will be moving into the income threshold for MTD, you can sign up for MTD before the date you are required to do so.

About Childminding UK

Childminding UK has been supporting childminders for over 30 years. Formed in 1991 by and for local working childminders in Northamptonshire, we now support childminders across the country. A registered charity, we are the only national organisation that solely supports childminders and we have recently achieved the Princess Royal Training Award for ‘Ensuring high quality childcare through training and support’. All staff are experienced childcare professionals, have been childminders themselves and our trustees are working childminders or have knowledge of childminding, so we have a good understanding of the sector.

To find out more about Childminding UK or to get in touch - childmindinguk.com.

The information in this article is provided by Childminding UK and does not represent Morton Michel

This article was originally published in 2023 and updated in June 2026.