Today (26 November) the Chancellor of the Exchequer presented the Budget 2025, outlining the state of the economy and announcing the government’s changes to the tax system and public spending for the year ahead. 

Minimum wage increases (England and Wales)

From April 2026, The National Living Wage will increase to £12.71 per hour (a 4.1% rise).

The National Minimum Wage will increase to: 

• 16-17 years old and apprentices – £8.00 per hour  (6% rise)

• 18-20 years old – £10.85 per hour (8.5% rise)

Childcare review  (England)

The Budget also confirmed a Government review of childcare provision as promised in the Best Start in Life strategy. This will be focused on simplifying the system for providers and families, making it easier to access childcare and increasing the overall impact on the government’s offer. We will be working closely with the DfE on this review and pushing for a comprehensive and ambitious plan to reverse the decline in childminder numbers. The Department for Education must address the issues within the current funding system with rates that are set according to nursery ratios, leaving childminders out-of-pocket, feeling undervalued and unable to sustain their businesses. Earlier this month, only 4% of childminders told us that the 3- 4-year-old funding rates are adequate to run their business sustainably.

Two-child limit (England and Wales)

The Chancellor announced the Government is scrapping the two-child cap that prevents families claiming benefits for more than two children, which is predicted to lift 450,000 children out of poverty. 

The maximum amount that can be reimbursed for childcare costs for eligible Universal Credit claimants will increase by £736.06 for each additional child above the current maximum cap for two children.

Childminder expenses (England and Wales)

The Budget document also mentions childminder expenses: “HMRC will update its guidance to clarify that childminders within Making Tax Digital (MTD) for income tax from April 2026 must follow MTD rules. For other childminders, HMRC will clarify how existing arrangements apply to those working from non-domestic premises.” 

Coram PACEY has been in confidential discussions with HMRC about these changes and what it will mean for childminders and the way you claim expenses and keep records. We are pushing for more clarity around business expenses and have made clear that childminders should not be disadvantaged in any way by the shift to Making Tax Digital. In the meantime, if you would like to find out more about MTD we are hosting a webinar with HMRC on 11 December 2025. They will be guiding you through the basics to help your plan, prepare and take action to be ready for MTD. Sign up here. 

Other measures in the Budget include:

• Fully funded training for apprentices under the age of 25 for “small and medium” businesses (England)
• £18m investment for playgrounds over two years (England)
• Three-year freeze on income taxation (England and Wales)
• “Substantial plans for reform” of special educational needs provision will be announced through a Schools White Paper early in the new year (England)

Ka Lai Brightley-Hodges, Head of Coram PACEY commented:

“Today’s Budget was a missed opportunity to address the crisis that is pushing the early years sector to breaking point. Last week Ofsted confirmed a continued decline in childminder numbers in England, and our own polling highlights the consequences of Government underfunding alongside rising delivery costs on business viability. Without substantial, urgent investment that enables providers to support children and families with high-quality early education and childcare, the situation will only deteriorate. We risk seeing more providers reducing or withdrawing funded places – and, in the worst cases, closing their businesses altogether.

The Government has today committed to undertaking a “review of childcare provision” in England. This must include a comprehensive and ambitious plan to reverse the decline in childminder numbers and confront the central issue of providers being underfunded and undervalued.

“We welcome the increase to minimum wage, which is essential to ensuring fair pay for those working in the sector. However, without a matching uplift in childcare funding, providers will struggle to meet these higher costs. This will make it harder to retain experienced, skilled professionals as well as expand businesses.

We also welcome the removal of the two-child limit as an important step toward reducing child poverty. But until the funded childcare offer is expanded fully so all children can benefit – regardless of their parents’ circumstances – too many will continue to miss out on high-quality early education, and the disadvantage gap will widen.”