Childminders and the impact of Making Tax Digital

HMRC confirmed that childminders under Making Tax Digital (MTD) will no longer follow the childminder agreement for allowable expenses (BIM52751) meaning unique allowances such as the blanket 10% allowance for wear and tear will no longer apply.

Alongside our lobbying for this decision to change, Coram PACEY has been speaking directly to childminders about the impact this will have on childminders’ businesses and their ability to continue supporting children and families.

Georgina is a childminder in North Yorkshire who will come under the 2027/28 wave of MTD. In this case study, she explains how the removal of the 10% wear and tear allowance places her in an impossible position – being faced with either increasing her fees or absorbing the costs personally. She reflects on how this is more widely having an impact on morale in the sector and how the government should provide reassurance to childminders and make them feel valued and considered in policy decisions that affect them.

Georgina, childminder in North Yorkshire

How would you describe your childminding setting?

I run a home-based childminding setting, supporting early years children and their families within my local community. I provide full-day care, funded places, and flexible support tailored to working families, building close, trusting partnerships with parents to nurture children’s wellbeing, development, and emotional security. 

I have five children on role and my own two children before and after school/holidays. My setting is intentionally small. That is its strength. Children receive consistent, relationship-led care in a home environment where they feel safe, seen and understood. I support children through key developmental stages – from first words and first steps, to school readiness and life foundations – and often work with families for several years, becoming a steady, familiar presence in their child’s early life. 

As a sole trader, I manage every aspect of the business independently. This includes delivering high-quality care and learning experiences, maintaining safeguarding and compliance, ongoing professional training, planning and assessment, communication with families, invoicing, tax and financial management, and all administrative responsibilities. 

Unlike larger settings, there is no office team, no finance department, and no shared workload. The responsibility – both practical and emotional – sits entirely with me. My working day does not end when children go home; paperwork, preparation and training are completed during evenings and weekends. 

Childminding is not simply “care in a home.” It is a regulated, inspected, professional early years provision operating within the same statutory framework as larger settings – but delivered by one person. 

How will MTD changes impact your childminding business? 

The removal of the wear and tear allowance, alongside the introduction of MTD, places additional financial and administrative pressure on already stretched home-based providers. 

In a childminding environment, furniture, soft furnishings, flooring, outdoor equipment, learning resources, and everyday household items experience significant and constant use. High chairs, tables, rugs, storage units, books, and outdoor play equipment are used intensively by multiple children, every day. The wear and tear allowance recognised this reality – that running a childcare setting from a home environment creates unavoidable depreciation. 

Its removal means that these costs must now either be absorbed personally or reflected in increased fees (which again is difficult, with most families using funding entitlement and these hourly rates set by the local authorities). In the current climate – neither option feels sustainable. 

Increased administrative burden 

MTD will also increase the administrative workload for sole traders who are already balancing long days of direct care with more work completed outside of working hours. Quarterly reporting requirements may seem minor in isolation, but for childminders – who already navigate extensive regulatory and documentation expectations – this represents additional time, cost, and mental load. 

Many childminders operate on modest margins. We do not have administrative staff or financial departments. Compliance takes place alongside nappy changes, school runs, planning invitations to play, safeguarding training, and supporting children’s emotional needs. 

These combined changes risk reinforcing a sense that small, home-based providers once again, feel they are overlooked within broader policy decisions. At a time when recruitment and retention are critical challenges within early years, increasing financial strain and administrative complexity may push experienced, highly skilled practitioners to reconsider their future in the profession. 

The long-term impact is not just on providers – but on families who rely on flexible, local, relationship-based childcare. 

Impact on childminder morale 

Morale within the childminding sector is fragile. Many practitioners are deeply committed to their work – passionate about early childhood, emotionally invested in the children they care for, and proud of the role they play in supporting families and the wider economy. However, there is growing exhaustion. 

Over recent years, childminders have navigated continual policy changes, increased regulatory expectations, rising costs, mounting admin/paperwork and increasing feeling that they are overlooked. Each individual change may appear manageable, but collectively they create sustained pressure. 

Announcements such as these can feel like another indication that the unique realities of home-based providers are not understood at policy level. There is a sense among many that the emotional labour, professional skill, and economic contribution of childminders are undervalued. 

Final reflections and looking forward 

Childminders enable parents to work. We provide early education that shapes children’s developmental foundations. Many offer flexibility that larger settings often cannot. We build long-term relationships with families and provide continuity of care that supports secure attachment and wellbeing. 

There remains enormous dedication within the sector. But there is also genuine concern about sustainability. Without meaningful recognition and proportionate support, the risk is not simply reduced morale – but the already proven exponential loss of experienced professionals from a workforce that communities rely upon. 

The sector does not lack passion. It needs reassurance that it is seen, valued, and considered in decisions that directly affect its survival. 

Coram PACEY continues to campaign strongly on the need to retain the unique allowances within the childminder agreement for childminders under MTD and avoid causing further financial and administrative burden on an already fragile workforce. We are urging HMRC and the Treasury to recognise the unique nature of childminding and support them accordingly. Read more about our campaign here.