Are you in? It’s your takings, not your profit
Add up everything you received for childminding in the 2025/26 tax year – parents’ fees, funded hours paid by your local authority, payments through Tax-Free Childcare or childcare vouchers, and any one-off start-up grants – before taking off food or anything else. If that total (plus any rent from property you let) is over £30,000, MTD applies from 6 April 2027. Over £50,000 and you have been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| A parent pays this month’s fees by bank transfer or Tax-Free Childcare | Sales / turnover | Record the full fee when it is received. |
| The local authority pays you for funded hours | Turnover (funded income) | Record it as income when it lands – it counts just like parents’ fees. |
| You buy food for the children’s lunches and snacks | Allowable expense – food | Keep receipts. If it’s mixed with your family shop, record only the childminding share. |
| You buy paint, crafts and a new set of toys | Allowable expense – play materials and equipment | Keep the receipt. |
| Your gas, electricity and council tax bills come in | Use of home – business proportion only | Work out a reasonable share based on the rooms and hours used, and claim that share. |
| You pay your Ofsted registration fee and a first aid course | Allowable expense – registration and training | Keep the confirmation emails. |
| You move money to your personal account | Drawings – not an expense | Fine to do, but it doesn’t reduce your tax. |
| Every three months | Quarterly update | Your software sends HMRC your income and expense totals. |
| After 5 April | Final declaration | Confirm the year’s figures; tax is worked out and due by 31 January. |
What can a childminder claim?
✓ Usually allowable
- Food and drink for the children you mind
- Toys, books, craft materials and outdoor play equipment
- Cots, high chairs, buggies and car seats used for minded children
- Business share of heating, lighting, water, council tax and broadband
- Business share of wear and tear and cleaning of your home
- Ofsted or childminding agency registration fees and DBS checks
- Paediatric first aid, safeguarding and other training
- Public liability insurance and business use car insurance
- Outings, entry fees and travel for minded children
- Wages for an assistant, and childminding software subscriptions
✗ Not allowable
- Food and toys for your own children
- The whole of your household bills (only the business share)
- Your mortgage capital repayments
- Clothing for yourself
- Money you take out for yourself (drawings)
Rules that matter for childminders
Use of home
HMRC accepts that childminders can claim a reasonable proportion of household costs based on the time and space used for the business. A common approach is to look at how many rooms are used and for how many hours a week, and apply that share to bills like heating, electricity and council tax. Keep a note of how you worked it out and use the same method each year.
Funded hours are income
Money from your local authority for funded childcare places is part of your business income, just like parents’ fees. Make sure both appear in your records, as they often arrive in different bank accounts or on different dates.
Grants
Start-up grants and other payments to help you set up or run your childminding business are usually taxable income. Record them when you receive them.
Assistants
If you employ an assistant, their wages are an expense, and you may need to run a payroll – that is separate from MTD.
Worked example
Sarah is a registered childminder in Stockport (illustrative example)
| Takings (turnover) | £37,500 |
| less Food and drink for minded children | −£3,400 |
| less Household costs – business share | −£2,900 |
| less Toys, crafts and play equipment | −£1,250 |
| less Outings and travel | −£680 |
| less Registration, training and DBS | −£420 |
| less Insurance and childminding software | −£610 |
| Profit | £28,240 |
| Income tax (estimate) | £3,134 |
| Class 4 National Insurance (estimate) | £940 |
| Total tax for the year | £4,074 |
| Put aside each month | £340 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for a childminder: check parents’ fees and local authority payments in your bank match your attendance records, add food and play receipts, apply your use-of-home share to the latest bills – then press submit in your software, or let your accountant do it. Childminding apps that track invoices make the income side quick.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Sole trader, one business.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £30–£60about £360–£720 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £60–£120about £720–£1,440 a year |
What pushes the price up: lots of transactions every month, or more than one income stream; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your business are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions childminders ask
Do funded hours count towards the MTD threshold?
Yes. Payments from your local authority for funded places are part of your childminding income and count towards the threshold.
How much of my household bills can I claim?
A reasonable proportion based on the time and space used for childminding. There isn’t one fixed percentage – keep a note of your method and stick to it.
Can I claim food if my own children eat the same meals?
You can claim the share for the children you mind. Food for your own family is not allowable.
I’ve just registered with Ofsted. Do I need MTD straight away?
Only if your income goes over the threshold. Your first year’s takings will be on your Self Assessment return, and HMRC uses that to decide when MTD applies.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.