If you’re a self-employed childminder, we’re confident you’ve already got your hands full keeping children safe and entertained. We therefore appreciate that Making Tax Digital (MTD) changes to the simplified childminder method for your tax reporting, might feel anything other than simple!
Here at Ellacott Morris, we’re here to hold your hand and guide you safely through any changes that affect you, providing clarification and support every step of the way.
Let’s start by establishing if you’ll be moving to MTD from April 2026…
The new MTD rules apply to self-employed individuals (and landlords) with a gross qualifying income of over £50,000 from 6th April 2026. Please see https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax for further information.
Now let’s clarify what’s included in the current ‘simplified method’ that you can continue to apply if you’re NOT moving to MTD…
The current simplified method includes the following, which can be used by everyone for the 25/26 tax year, and for those who WON’T be changing to MTD thereafter:
- 10% wear and tear allowance
- Household expenses using HMRC percentage tables
- Food estimates without receipts
- Simplified record keeping rules
*Please note that the 10% wear and tear allowance only applies to income earned from childminding carried out in your own home. Occasional trips out (such as parks or outings) are still treated as home-based childminding, provided your business is fundamentally run from your home. If you carry out any childcare from non-domestic premises (for example halls or other settings), that portion of your income must be excluded when calculating the 10%.
You may choose to change to the non-simplified method and claim actual costs if you prefer, regardless of your MTD obligations. Please read on to find out what this entails…
If you’re moving to MTD from April 2026, here’s what you need to know…
From April 2026, childminders within MTD are required to follow standard business expense rules, moving away from estimated and flat rate (simplified) claims towards actual recorded costs.
From April 2026, HMRC has confirmed that the simplified childminder methods no longer apply to those who fall into MTD. You will not be able to continue to use any of the methods listed above. Instead, you will need to claim ‘actual costs’ – no estimates, including food and shopping. Clear receipts must be retained, so mixed supermarket shopping receipts for your own and business groceries are no longer acceptable. Please also note that receipts are not required for items costing less than £10. Receipts are required if several smaller items are purchased at one time and the total cost is £10 or more.
For any other business expenses, the normal principles of business expenses should be followed. Examples of business expenditure for childminders could include the cost of toys, outings, books, safety equipment, stationery, travel fares, membership fees or subscriptions to childminding organisations, public liability insurance premiums and the actual cost of telephone use for childminding purposes.
Now that childminders who come under the MTD rules are to follow standard business expenses, we’ve listed below the business records that you must keep:
- All receipts and expenses
- All goods purchased and sold
- All supporting documents relating to the transactions of the business, that is accounts, books, deeds, contracts, vouchers and receipts and computer records
If these changes don’t feel like a walk in the park, then reach out to our team of tax experts who can help you navigate your way through MTD ensuring complete compliance, and less stress!
