Coram PACEY leads the UK wide campaign against HMRC's wear and tear allowance removal
Coram PACEY leads the UK wide campaign against HMRC's wear and tear allowance removal
A long-standing tax relief that has protected childminders for nearly four decades is set to be abolished — and the consequences could be devastating for childminders across the UK.
An historic agreement under threat
Since 1986, childminders across the UK have benefited from a childminder-specific agreement with HMRC that allows them to deduct 10% of their total childminding income to cover wear and tear of furniture and household items.
This arrangement has always reflected the unique nature of childminding — a profession conducted in the provider's own home, where the daily presence of children inevitably causes damage to flooring, furniture, kitchen appliances, bathrooms, and outdoor spaces.
However, under HMRC's Making Tax Digital (MTD) programme — which requires self-employed individuals to use compatible software for digital record-keeping, quarterly updates, and tax returns — the blanket wear and tear allowance will no longer apply. Childminders will instead only be able to claim tax relief on actual, individually documented purchases, repairs, and replacements. The transition begins in April 2026 for those earning over £50,000, with further phases bringing in those earning over £30,000 from April 2027 and £20,000 from April 2028.
Survey findings paint a stark picture
A survey of over 4,800 UK childminders by Coram PACEY has revealed the high levels of concern that this change has triggered. As many as 82% of respondents said the removal of the allowance would leave them financially worse off — with 70% saying the loss would be significant. Alarmingly, one in two childminders — 53% — said they plan to leave the workforce as a direct result. A further 31% plan to take on fewer children, 31% intend to raise fees for families, and 24% plan to reduce their business below the MTD threshold altogether.
The administrative burden is also a serious concern. Ninety-six per cent of respondents said the new process would increase their workload. Currently, 68% of childminders are entirely paper-based for financial records, and just 9% feel they have been given adequate time to understand and implement the new digital system. Only 4% are confident they have sufficient cash flow to cover upfront costs of repairs and replacements before reclaiming them.
A childminder survey respondent said:
"The removal of the wear and tear allowance will have a huge impact on my childminding business. Childcare puts substantial extra strain on my home — daily use of toys, furniture, flooring, kitchen appliances, bathroom facilities, and outdoor space. The current allowance fairly compensated for this unavoidable wear. The new requirement to claim individual expenses is unrealistic for childminders."
Sector leaders call for urgent action
In January 2026, Coram PACEY coordinated a joint letter to HMRC's First Permanent Secretary and Chief Executive, John-Paul Marks, co-signed by childminding organisations across the UK. The letter calls for the reinstatement of the 10% wear and tear allowance under MTD, warning that requiring childminders to itemise every expense places an unsustainable financial and administrative burden on small, home-based businesses already under significant pressure.
Ka Lai Brightley-Hodges, Head of Coram PACEY, described the survey findings as "extremely stark and sobering," warning that childminding numbers are already at their lowest level on record. With childminders providing over 145,800 places in England and thousands more across Wales, Scotland, and Northern Ireland, the potential loss of providers on this scale could leave tens of thousands of families without childcare. The letter has also been forwarded to Education Secretary Bridget Phillipson.
Graeme McAlister, Chief Executive of the Scottish Childminding Association (SCMA) warned that over 9,800 childminding places in Scotland alone could be at risk, noting that the Scottish Government has written at Cabinet level to the Treasury requesting a pause. An overwhelming 93% of survey respondents in Scotland support a delay while stakeholders work with HMRC to develop a fairer solution.
Brett Wigdortz, CEO of the childminder agency tiney said:
‘’The consensus from the childminding community could not be clearer. It’s not a question of ‘if’ childminders will be affected – it’s a case of how many childminders will leave the sector as a result. To plough ahead regardless would be a guaranteed own goal from a government that wants every child to have the best start in life.’’
Further reading:
Join the Coram PACEY campaign against the removal of the wear and tear allowance