Self-Employed Childminder
Tax & MTD Guide 2025/26

Childminding has its own tax rulebook in a way almost no other home-based trade does. Because the business is run from your own house, during hours that overlap with family life, HMRC long ago agreed a special, simpler method for working out what you can claim, developed with the childminding associations and still in use today. That single agreement is the difference between a childminder who overpays tax every year and one who claims fairly for the heating, the food, the wear on the carpets and the toys. Layer on the government-funded free hours, the Child Benefit charge that can quietly bite a higher-earning household, and the move to Making Tax Digital, and there is more to a childminder's return than the modest fees might suggest.

How Tax Works for a Self-Employed Childminder

A registered childminder is a sole trader and pays Income Tax on profit, which is your total fees and funding minus your allowable expenses, not on turnover. For 2025/26 the personal allowance is GBP 12,570, so your first GBP 12,570 of profit is tax-free; then 20% applies up to GBP 50,270, 40% to GBP 125,140 and 45% above. You also pay Class 4 National Insurance at 6% on profit between GBP 12,570 and GBP 50,270, then 2% above. Everything is reported on a Self Assessment return, filed and paid online by 31 January following the 5 April year end.

Crucially, all your income streams count. Parent-paid fees, additional charges for meals or trips, and the funding you receive for government free childcare hours are all taxable trade income. You register for Self Assessment by 5 October following the tax year in which you first started childminding.

Allowable Expenses for Childminders

Every cost must be incurred wholly and exclusively for the childminding business, but the home-based nature of the work means several everyday household costs are partly claimable through the agreement above.

Larger items such as a new buggy, a stack of child-sized furniture or outdoor play equipment used wholly for childminding can be claimed in full in the year of purchase through the Annual Investment Allowance, rather than depreciated.

The Child Benefit Charge: Why a Good Year Can Cost You

This is the trap that surprises higher-earning childminding households. The High Income Child Benefit Charge applies where one partner's adjusted net income reaches GBP 60,000. Above that, you repay 1% of the household's Child Benefit for every GBP 200 of income over GBP 60,000, with the benefit fully clawed back at GBP 80,000. Childminding profit is added to any other income, including a partner's salary if they are the higher earner, when this threshold is tested. A childminder running a large setting, or one whose partner is close to the threshold, can find a strong trading year triggers or increases the charge. Use TapTax's Child Benefit charge calculator to see exactly where you stand and whether claiming more allowable expenses (for example, fully using the use-of-home agreement) brings your adjusted net income back under GBP 60,000.

If you also have any PAYE income, check your code with TapTax's tax code checker so the employed side is collecting the right amount before you add the childminding profit.

VAT and CIS

Childminding is, in practice, almost never a VAT issue. The supply of childcare by a registered childminder is generally exempt from VAT as a welfare service, so you do not add VAT to fees and the GBP 90,000 registration threshold rarely bites. (If you branch into clearly separate, non-exempt activities, take specific advice, but ordinary registered childminding is exempt.) The Construction Industry Scheme has no relevance to childminding at all; you receive your fees and funding in full and settle all tax through Self Assessment.

Scottish and Welsh Childminders

Income Tax on self-employment profit is devolved to Scotland. A Scottish childminder pays at the Scottish bands, which for 2025/26 run across six rates: a 19% starter rate, a 20% basic rate, a 21% intermediate rate, a 42% higher rate, a 45% advanced rate and a 48% top rate, applied above the GBP 12,570 personal allowance, and the tax code carries an S prefix. Welsh childminders carry a C prefix; Wales can set its own rates but currently matches the rest of the UK. National Insurance, the personal allowance and the Child Benefit charge thresholds are UK-wide. Registration is also devolved in practice: childminders register with the Care Inspectorate in Scotland and Care Inspectorate Wales rather than Ofsted, but the fees are equally deductible.

Worked Example: A Childminder on GBP 27,000

Hannah childminds five days a week, around 45 hours, caring for four children including two on funded free hours. Her total income, fees plus funding, is GBP 27,000. She claims her use of home through the HMRC agreement and keeps food and equipment receipts.

Hannah's allowable expenses:

(Figures illustrate the structure; your own use-of-home and food costs will differ.)

Profit: GBP 27,000 minus GBP 14,660 = GBP 12,340

Hannah's profit of GBP 12,340 is just below the GBP 12,570 personal allowance, so she owes no Income Tax and no Class 4 NIC for the year. This is the realistic picture for many childminders once the use-of-home agreement and food costs are claimed properly: a healthy turnover that translates into a modest, sometimes nil, tax bill. The childminder who skips the use-of-home claim, by contrast, can find herself paying tax on profit she never really kept. Run your own numbers in TapTax's sole trader tax calculator.

MTD for Income Tax: What Changes and When

Making Tax Digital for Income Tax (MTD for ITSA) replaces the annual return with digital record-keeping and quarterly updates. From April 2026, anyone with self-employment income over GBP 50,000 must keep digital records and send HMRC four quarterly updates plus a final declaration using compatible software. The threshold falls to GBP 30,000 from April 2027 and is planned to reach GBP 20,000 from April 2028.

The key point for childminders is that the threshold is based on income (turnover), not profit. A childminder with GBP 35,000 of fees and funding but only GBP 12,000 of profit is still measured on the GBP 35,000 figure, so a busy setting can fall into MTD even with a low profit. Most childminders remain below GBP 30,000 of income for now, but anyone running a larger or assistant-supported setting should plan ahead. TapTax's plain-English MTD guide for sole traders explains the quarterly process, qualifying software and deadlines. Logging fees and funding as they arrive, and photographing food and equipment receipts weekly, makes the transition painless.

Common Mistakes Childminders Make

Not using the use-of-home agreement. The single biggest error. Many childminders claim a token amount or nothing at all for heating, lighting, water and wear and tear, when the HMRC hours-based agreement allows a substantial, fully legitimate deduction.

Forgetting that funding is taxable. Government free-hours funding is income, not a grant to be ignored. It belongs in your turnover alongside parent fees.

Under-claiming food. The cost of feeding minded children is fully allowable. Keep a sensible record; this is often several thousand pounds a year.

Missing the Child Benefit charge. A profitable year, or a partner near GBP 60,000, can trigger a clawback no one expected. Check your combined position before the return is final.

Capitalising equipment unnecessarily. Buggies, furniture and play equipment used wholly for childminding can usually be deducted in full in the year of purchase through the AIA, rather than spread over years.