The Childminder's Guide to Expenses and Tax

In partnership with Coram PACEY and ANNA Money.

Childminding is a business, and like any business it comes with a bit of tax to sort out. The good news is that childminders get some of the most practical, generous tax rules around. Once you know how they work, claiming what you are owed is straightforward.

This guide walks you through it in plain English. No jargon, no lectures, just what you need to keep more of what you earn and stay on the right side of HMRC.

Most childminders follow the same set of rules for years, then at some point move onto a newer system called Making Tax Digital. Which route you are on changes how you work a few things out, so throughout this guide you will find tables comparing what applies if you are not in Making Tax Digital against what applies if you are.

Find your route on the map

Which route am I on? Not sure? If HMRC hasn't written to tell you to use Making Tax Digital, choose "Not in Making Tax Digital" for now.

Part A. Getting started

You are running a business. That means telling HMRC, paying tax on your profit, and a little National Insurance. Here is how to set yourself up without the stress.

You are self-employed

When you childmind, HMRC treats you as self-employed, running a business. In tax language that business is a trade, and the money you make from it is taxed as profit. Nobody takes the tax off for you, so it is up to you to report your income and pay what you owe.

Good to know: Almost every childminder is running a business, and this guide is written for you. If you only childmind occasionally as a one-off or casual favour, HMRC may class your earnings as "miscellaneous income" rather than business profit, because you are not considered to be running a business. Your tax rate stays the same, but the childminder shortcuts in Part C would not apply. If you earn under £1,000 from it, there is usually nothing to report.

Register with HMRC

Self Assessment is how you report your income. Once you start childminding, you need to register your business with HMRC for Self Assessment. You must register by 5 October following the end of the tax year you started in. The tax year runs from 6 April to 5 April.

How your profit is taxed

You are taxed on your profit, not just on the payments you receive. Profit is simply your income minus your allowable expenses. The whole point of Parts C to E is helping you claim those expenses correctly, because the more genuine business costs you claim, the less tax you pay.

You do not pay Income Tax on all of your profit either. Everyone has a tax-free amount each year, called the Personal Allowance, and tax is only charged above it.

Example: Meena earns £22,000 in fees and has £7,000 of allowable expenses. Her profit is £15,000. She pays Income Tax only on the part above her Personal Allowance, plus a little National Insurance.

If you live in Scotland: Income Tax rates and bands are different in Scotland. If you are a Scottish taxpayer, check the rates for where you live.

National Insurance, the up-to-date position

National Insurance is separate from Income Tax. Depending on how much you earn, you may pay some, or none at all.

Class 2 National Insurance used to be a flat weekly charge. It no longer exists as a compulsory payment. Instead, if your profit is above £7,105 (for the current 2026/27 tax year) you are automatically treated as having paid it, which means your State Pension record builds up for free without you doing anything.

If your profit is below £7,105 you can choose to pay a voluntary amount, currently £3.65 a week (£189.80 for the year), through your tax return to protect your pension record.

Class 4 applies once your profit exceeds £12,570. It is 6% on profit between £12,570 and £50,270, and 2% above that. It is worked out for you as part of your tax return, so you do not calculate it yourself.

Watch out: Heard you have to pay Class 2 National Insurance every week? That changed in April 2024. Most childminders no longer pay it but still get the pension credit.

The £1,000 trading allowance

There is a tax-free allowance of £1,000 for trading income. If your total childminding income for the year is £1,000 or less, you usually do not need to report it. If it is more, you can either claim your actual expenses in the normal way, or claim the flat £1,000 trading allowance instead, whichever leaves you better off. You cannot do both.

For almost any childminder who works regularly, real expenses come to far more than £1,000, so claiming actual expenses will nearly always win. The allowance really only helps someone who childminds a little and spends very little.

Setting up, before your first paid day

Most childminders spend money before their first paid day, for example on registration, checks, training, safety equipment and toys. That spending is not lost. Costs you paid getting ready to trade can usually be claimed as if you spent them on your first day of business, reaching back up to seven years. So, keep every receipt from the moment you start setting up.

Start-up grants can be fiddly. A grant received before you begin trading is generally not taxable, but it may reduce the set-up costs you can claim relief on. A grant to help with running costs once you are trading is usually taxable income. Because a specific grant can affect your tax in more than one way, it is worth checking how yours should be treated.

Key takeaways

• You are self-employed, so you report your own income and pay your own tax.
• Register for Self Assessment by 5 October after your first tax year.
• You are taxed on profit, which is income minus allowable expenses.
• Most childminders no longer pay Class 2 National Insurance but still build up their pension.
• Keep receipts from before you start. Set-up costs usually count in your first year.

Part B. Working out your profit

Profit is what is left after your business costs. Get three things straight: what counts as income, how you record it, and the one rule for what you can claim.

What counts as income

Your profit starts with your income, which is all the money your childminding brings in before any expenses come off. It is more than just the fees parents hand over. Count all of these:

• Fees paid by parents and carers
• Government funding for free childcare hours and other entitlements, paid by the local authority
• Retainer fees to hold a place open
• Late-collection charges and similar extra fees
• Separate charges for meals or trips, where you bill parents for them

Watch out: Government funding for free hours counts as income. Because it comes from the local authority rather than a parent, it is easy to leave out, but it belongs in your income. Your related costs then come off as expenses in the normal way.

How you keep your books: cash basis or traditional

There are two methods, and the difference is all about timing. With the cash basis you record income when the money actually reaches you, and expenses when you actually pay them. It is how most people naturally think about money, it is the standard method, and it suits most childminders. With traditional accounting you record income when you earn it and costs when you incur them, even before any money changes hands, and you have to choose it on purpose.

Two knock-on points are worth knowing. On the cash basis you claim most equipment as an expense when you buy it, and if a parent never pays you there is nothing to claim as a bad debt, because you never counted that money in the first place.

The golden rule: business use only

One rule decides whether any cost can go in your accounts. To be claimable, a cost has to be spent wholly and exclusively for your business. In plain terms, it has to be a genuine business cost, not a personal one.

Most childminder costs are shared, and that is fine. Because you work from home, things like heating, your phone and your internet are part business and part personal. The rule does not block these. As long as you can work out a fair business share, you claim that share and leave the personal part out. This is called apportionment. You just need a method that is reasonable and consistent, such as splitting by use, by time, or by the number of rooms you use.

Example: Priya's mobile phone bill is £200 for the year. About £70 of it relates to childminding and £130 is personal, so she claims the £70 business share. A short note explaining how she worked it out is all she needs to keep.

Made a loss in year one? Lots of childminders spend more than they earn in their first year, once set-up costs and equipment are added up. That is a loss, and it is completely normal. A loss is not wasted: you can usually carry it forward to reduce a future tax bill, and there may be other options too. Because the choices depend on your situation, a first-year loss is a good moment to get a little advice.

Key takeaways

• Income includes funding for free hours, retainers and extra charges, not just fees.
• The cash basis (money in and out as it happens) is the default and suits most childminders.
• You can only claim genuine business costs.
• Shared costs are fine: claim the business share and note how you worked it out.
• A loss in your first year is normal, and it can reduce future tax.

Part C. The childminder rules

Childminders get shortcuts no one else gets. If you are not in Making Tax Digital you can use them. If you are, you claim the same costs using actual figures.

These rules come from a long-standing agreement between HMRC and childminders, first made in 1986 and updated in 2026. They give you shortcuts: simple flat rates and percentages that save you tracking every penny. The shortcuts are optional. You can always work out your actual costs instead, and sometimes that gives you a bigger deduction.

Wear and tear of furniture and household items

When children are in your home they wear out your furniture, carpets and other items faster than normal, and you can claim tax relief for that.

Money childminders miss: Cleaning caused by your childminding can be claimed separately, even if you are using the 10% flat rate. It is a genuine cost that many childminders forget.

Household running and fixed costs

You can claim a fair share of your household bills. Running costs are gas, electricity, and water if you have a meter. Fixed costs are Council Tax, water if you do not have a meter, and rent or the interest part of your mortgage.

Example (not in Making Tax Digital): Sam cares for children at home for 20 hours a week. His annual bills are £1,500 for gas and electricity and £3,000 for Council Tax and mortgage interest. Annually, he claims 17% of £1,500 (£255) and 5% of £3,000 (£150), so £405 in total.

A tool to help you work this out

If you are in Making Tax Digital, you work out your home costs from your actual figures. ANNA's work-from-home expenses calculator does this for you: you enter your actual bills, the rooms you use and how much of each is for childminding, and it works out your claimable share. Print the results page from your browser and keep it with your records, so you can show how you worked the figure out.
 

Food and drink

The food and drink you give the children in your care is a business cost, so you can claim it.

A common worry: In Making Tax Digital you can still claim for the children's meals. This does not go away. You simply record what you actually spend rather than estimating.

Example: A "fair proportion" just means a reasonable, consistent way of splitting a shared cost that you could explain to HMRC if they asked. For food, the easiest method is usually by the number of people eating. You cook a meal for everyone in the house. Of the five people eating, three are children you mind, so you claim three-fifths of the cost of that meal. For a weekly shop that mixes family and childminding items, estimate the share that was for the children, note how you worked it out, and claim that.

Records and the £10 receipt rule

If you work somewhere other than your home

Since a 2024 change, all childminders in England can work from non-domestic premises. The type of childminding registration matters for the shortcuts above.

Childminders registered as working from domestic premises can for some of their time work from non-domestic premises. The wear-and-tear and household-cost rules apply only to the part of your childminding that happens in your own home. Work out your 10% and your household percentages using only your home-based income and hours. Costs for other premises, such as hiring a hall, are claimed as normal business expenses.

Childminders registered as working from non-domestic premises can never work from their home (or other domestic premises) and therefore cannot claim expenses related to the home.

Example: Sue is not in Making Tax Digital. She works 50 hours a week: 30 at home and 20 from a hired hall. Her childminder shortcuts only apply to the part done at home. Wear and tear: she claims 10% of her home-based income. Her home hours are 30 out of 50, so about 60% of her income relates to home care, and she claims the 10% against that share. Household bills: she uses the hours-based table for the 30 hours a week she works at home, so 25% of running costs and 8% of fixed costs. She does not then apply a further percentage, because the table already reflects her home hours. Hiring the hall is a normal business expense, claimed in full.

Choosing the method that is best for you

If you are not yet in Making Tax Digital, you get a choice each year: the flat-rate shortcuts, or your actual costs, whichever gives the bigger fair deduction. Keep enough records to work out both, then claim the better one. The difference matters most for wear and tear.

Example: Farah earns £20,000 a year, so her flat 10% wear-and-tear claim is always £2,000. In a quiet year she spends almost nothing, so the £2,000 flat rate wins. In a year she replaces sofas, beds and flooring for £4,000 (80% business), her actual claim is £3,200, which beats the flat rate. The better method can change from year to year.

Watch out: You cannot mix methods for the same cost, such as claiming the 10% flat rate and the cost of replacing the same furniture. And you cannot stack the childminder shortcuts on top of HMRC's separate simplified expenses scheme. Pick one method per cost.

Key takeaways

• The childminder shortcuts are optional, and available if you are not in Making Tax Digital and work from domestic premises.
• Wear and tear: 10% of home income, or actual costs. You cannot claim both for the same items.
• Household bills: the hours-based table, or a fair share of actual costs.
• You can always claim the children's food and drink, on either route.
• Extra cleaning is claimable, even alongside the 10% flat rate.
• Home-based shortcuts only cover the part of your work done at home.

Part D. Making Tax Digital

Making Tax Digital changes how you keep records and report, not what you can claim. It means digital records, a short update every three months, and a year-end done through software.

✨ For a step-by-step look at the requirements, deadlines and setup process, read our full guide to Making Tax Digital for childminders.

Do you have to join, and when?

Not everyone joins at once. It is being brought in in stages, based on your turnover, which is your total income before any expenses come off, it is not your profit. If you also rent out a property, that rental income is added to your childminding income for this test.

Turnover, not profit: A childminder with £35,000 of fees who spends £10,000 has a profit of £25,000, but the figure that counts for Making Tax Digital is the £35,000. Always check your turnover and add in any rent.

HMRC checks everyone's tax returns and writes to you if you need to start, so you do not have to work it out alone. If you are newly self-employed, you file one ordinary tax return first. Once you are in, you generally stay in, even if your income later dips for a year.

Example: Leanne earns £46,000 in fees and receives £8,000 in rent from a flat. On its own her childminding is under £50,000, but the two are added together to make £54,000. So, Leanne joins Making Tax Digital from 6 April 2026.

What changes when you join

Three things change day to day. You keep your records digitally using software that connects to HMRC. You send a short summary update every three months and you finish the year off through the same software, with a final declaration that replaces the old tax return.

What stays the same

It is easy to hear that everything is changing. It is not. You can still claim all your business expenses, still claim for the children's food and drink, and still use the cash basis. Your accounts book is still worth keeping. The one real change to your expenses is how you claim for wear and tear, from a flat rate allowance to actual costs, which for some childminders gives a bigger deduction than the 10% ever did.

Example: Aisha is in Making Tax Digital, so she claims the actual cost of items worn out by the children rather than the old 10% flat rate. Her home childminding income is £18,000, so under the old flat rate her wear and tear claim would have been £1,800. This year she replaced two sofas, the living room carpet and a set of dining chairs, all heavily used by the children, costing £3,000 in total. She uses them 80% for childminding, so she claims £2,400. That is £600 more than the flat rate would have given her. She keeps the receipts and a short note of the 80% split as her record. In a quieter year her claim would be smaller. The point is to keep your receipts, so you claim everything you are entitled to.

Who does not have to use it

Some people do not have to use Making Tax Digital even if their income is over the threshold. Some groups are exempt even above the threshold, mainly those without a National Insurance number (you need one to sign up) and those who apply to HMRC as digitally excluded, for example because of their age, a disability, poor internet where they live, or their beliefs. A few others, such as foster carers claiming qualifying care relief, get a one-year delay. Being exempt does not remove the need to report your income, it only removes the digital part. Finding software tricky is not the same as being unable to use it, so check with HMRC rather than assuming.

Key takeaways

• Making Tax Digital changes how you report, not what you can claim.
• The test for joining is your turnover, not your profit, with any rent added in.
• Thresholds fall over time: £50,000 from 2026, then £30,000, then £20,000.
• You keep digital records, send quarterly updates, and file a final declaration.
• You still claim every expense, just using actual costs for home-based ones.

Part E. Your expenses, from A to Z

Your working list of what you can claim. You can claim the same costs on both routes. In Making Tax Digital you work out your home costs from actual figures rather than the flat rates. There is money here that childminders routinely miss.

One rule sits behind every item: you can only claim a cost that is for your childminding, and if something is shared with your family, you claim only the business share.

Home costs

Heating, electricity, water, Council Tax, rent or mortgage interest, and wear and tear are the big ones for childminders. They work differently on each route, so they are covered in full in Part C.

Toys, equipment and safety

Toys, books and craft materials, nappies and consumables, cots, highchairs, buggies and car seats, safety equipment like stair gates are all examples of business expenses. On the cash basis, you simply claim equipment as an expense when you buy it, so a £250 buggy is a £250 expense.

Food, outings and activities

The children's food and drink (see Part C), plus entrance fees to soft play, farms, the zoo or swimming, playgroup and activity fees, and the travel to get there are all business expenses.

Car, mileage and travel

You can choose between two methods, but you must stick to one for each vehicle. The simplified mileage method uses a fixed rate per business mile, covering fuel, insurance, and running costs, so you only need to record your business mileage. Alternatively, you can claim the business proportion of your actual vehicle expenses. Parking, tolls and public transport fares can be claimed on top of either method.

Travelling to training and events, and staying over

If a course or event is one you can claim for, like the CPD covered later, the cost of getting there counts too. That means your train and bus fares, or your mileage if you drive. And if it is far enough away that you need to stay the night, reasonable accommodation and a meal are claimable as well. The usual rule applies: the trip has to be for your childminding. If you add personal time, only claim the business part.

Money childminders miss: Travel to training is easy to forget, and so is the overnight stay that sometimes comes with it. If you have to go somewhere for claimable training or a professional event, claim the getting there and the staying over, not just the course fee.

Example: a conference away from home. Nadia travels from Leeds to London for the Coram PACEY conference, which counts as CPD for her childminding. She claims the conference ticket, her train fare both ways, one night in an ordinary hotel near the venue because the early start means she cannot get there and back in a day, and her evening meal. "Reasonable" means a sensible, normal cost for the trip, so a standard hotel near the venue is fine. If she chose a luxury hotel for the treat of it, or added the minibar and a film to the room, those extras would be personal and she would leave them out. And if she stayed a second night to see the sights, that night and those meals would be personal too.

Insurance, registration and professional costs

Public liability insurance, your Ofsted or agency registration, DBS checks, membership of a body such as Coram PACEY, and any accountancy or bookkeeping fees are also business expenses.

Money childminders miss: The ICO data protection fee is the one people forget. Because you hold personal information about children and families you have to register with the Information Commissioner's Office and pay an annual fee. It is a legal requirement, and it is claimable. DBS check costs are also easy to miss.

Training and CPD

Training that keeps your existing skills current is claimable, such as renewing paediatric first aid, or refreshing safeguarding and food hygiene training. Training for a brand-new qualification, especially the course you took to become a childminder, is treated differently and may not be claimable.

Which training can I claim? Ask what it does for you. If it keeps your current childminding skills up to date, or builds on what you already do, you can claim it, whatever it costs. If it gives you a brand new qualification or trains you for different work, you cannot. The main example you cannot claim is the training you did to first qualify as a childminder, because you paid for that before your business began.

Travelling to a course, or staying overnight? See the "Travelling to training and events, and staying over" section above for what you can claim.

Admin, phone, internet and software

Your mobile phone and home internet (business share), stationery, printing and postage, and website and advertising costs are business expenses.

Money childminders miss: Bank charges and card or payment-processing fees on money you take for childminding are claimable and often overlooked. So is the cost of your accounting or Making Tax Digital software, which is a new expense. A separate business account for childminding makes all of this far easier to work out.

Other, and often missed

Other expenses can be claimed such as cleaning caused by childminding (claimable even alongside the 10%), upkeep of the garden or outdoor space the children use, subscriptions to childminding resources, and replacing equipment. Unpaid fees (bad debts) can only be claimed if you use traditional accounting. On the cash basis there is nothing to claim, because you never counted that money as income, so you are simply not taxed on it.

Money childminders miss: Consumables such as nappies, wipes and PPE (for example gloves and aprons) are all business expenses that you can claim for.

Loans: interest yes, repayments no

If you borrow money for your childminding, it is worth knowing which part you can claim. Repaying the loan itself is not an expense. You are just giving back money you borrowed, so it does not reduce your profit. The interest you pay on top of that is different. As long as the loan is genuinely for your business, the interest is a claimable cost. If a loan is part business and part personal, you claim only the business share of the interest.

Example: Carla takes out a loan to install new garden play equipment for her childminding, and her repayments are £150 a month. Of that, £120 is repaying the loan itself and £30 is interest. She cannot claim the £120, but because the loan is wholly for her business, she can claim the full £30 of interest each month.

What you cannot claim

• Anything private, or the private proportion of a shared cost, such as your family's food.
• Your own everyday clothing (genuine protective wear like aprons is fine).
• Money you take out for yourself, known as drawings.
• Childcare for your own children.
• Fines and penalties, such as parking fines.
• The repayment of a loan itself, although the interest on a business loan can usually be claimed.

Key takeaways

• You can claim the same costs on both routes. In Making Tax Digital you work out your home costs from actual figures rather than the flat rates.
• For shared costs, always claim the business share only.
• Do not miss the ICO fee, DBS costs, extra cleaning, bank charges and software.
• Ongoing CPD is claimable. The course to first qualify may not be.
• Private costs, drawings and fines can never be claimed.

Part F. Records, deadlines and staying on track

Good records make everything else easy. Keep them for five years, know your deadlines, and watch out for the payment on account surprise.

What to keep, and for how long

Keep enough to show your income and expenses clearly: records of your fees and funding, records of what you spent, the receipts that back them up, your attendance register, and your bank statements. As a self-employed person you must keep these for at least five years after the 31 January filing deadline for that tax year.

Five years, not six: You may have seen six years quoted. That figure is for VAT-registered businesses and companies, not self-employed childminders. For you it is five years after the filing deadline. Keeping records longer does no harm, but five years is the requirement.

The Coram PACEY Accounts book

Childminders have a ready-made, HMRC-recognised way of keeping records: the accounts book (previously known as the cashbook) and attendance register produced by Coram PACEY. If you are not in Making Tax Digital, these on their own are enough. If you are, you also need to keep records digitally, and many childminders still use the accounts book and register to capture the day-to-day figures that then go into their software.

Payments on account

This one surprises a lot of people. Once your Self Assessment bill reaches £1,000, HMRC asks you to start paying towards next year's tax in advance. These are called payments on account. Each one is half of your previous year's bill, and you pay them in two instalments, on 31 January and 31 July. So in a year they add up to your last bill again, paid ahead of time rather than as extra tax.

Example: In her first full year Meena owes £2,000, due on 31 January. Because her bill is over the threshold, she also pays her first instalment of £1,000 on the same day, so £3,000 in January, then another £1,000 in July. Those two payments count towards next year's bill.

Plan for it: The first time this applies, that January bill jumps. It is not an extra tax, you are paying next year's in advance, and it evens out, but it is a nasty surprise if you are not ready for it. Set money aside through the year. If you expect to earn less next year, you can ask HMRC to reduce the payments.

Deadlines and penalties

If you are not in Making Tax Digital, the key dates are simple: file and pay by 31 January, with a second payment on account (if you have them) on 31 July. Filing or paying late leads to penalties and interest that grow over time, so even if you cannot pay in full, file on time and talk to HMRC, who can often arrange a payment plan.

If you are in Making Tax Digital, you also have the quarterly updates and the final declaration. Late quarterly updates use a points system, so the occasional slip does not cost you money straight away.

A gentle first year: For the very first childminders joining in April 2026, HMRC will not charge penalty points for late quarterly updates during that first year, to give everyone time to settle in. Do not rely on it beyond that first year and remember it does not change the deadline to pay your tax.

Key takeaways

• Keep your records for at least five years after the 31 January deadline.
• The Coram PACEY Accounts book and register are HMRC-accepted (digital records too, under Making Tax Digital).
• Payments on account mean paying next year's tax in advance. Plan for the bigger January bill.
• File on time even if you cannot pay and talk to HMRC about a plan.
• The first year of Making Tax Digital has a softer approach to late updates.

Quick reference

Rates at a glance

Some figures change every tax year. Always check the current amount before you file. The items below are the ones childminders ask about most.

Printable expense checklist

Tick what applies to you and keep a record for each one. See the guide above for how each works.

☐ Heating, electricity and water
☐ Council Tax, rent or mortgage interest
☐ Wear and tear of furniture and household items
☐ Extra cleaning caused by childminding (often missed)
☐ Toys, books, games and craft materials
☐ Nappies, wipes and consumables
☐ Cots, highchairs, buggies, car seats, safety equipment
☐ Tablet used for the setting (business share)
☐ Food and drink for the children
☐ Outings, activities and the fares to get there
☐ Business mileage, or actual car costs (pick one)
☐ Parking, tolls and public transport
☐ Public liability insurance
☐ Ofsted or childminder-agency registration
☐ DBS check or Update Service (often missed)
☐ ICO data protection fee (often missed)
☐ Coram PACEY or professional membership
☐ Accountancy, bookkeeping or Making Tax Digital software (often missed)
☐ Paediatric first aid and other refresher training
☐ Mobile phone and home internet (business share)
☐ Stationery, printing, postage, advertising
☐ Bank charges and card or payment fees (often missed)
☐ Set-up costs from before you started (keep the receipts)

Where this comes from

This guide is based on official HMRC sources, including the GOV.UK guidance for childminders on claiming expenses and keeping records, HMRC's Business Income Manual (BIM52751), the GOV.UK guidance on Making Tax Digital for Income Tax, and the GOV.UK guidance on expenses for the self-employed.

This guide is general information, not personal tax advice. For advice about your own situation, contact HMRC or a qualified accountant.