Claim what you are entitled to, keep the right records, and feel ready for Making Tax Digital
Understanding tax can feel overwhelming when you’re running a childminding business. Once you understand your taxes and how they work, it becomes much easier to claim the expenses you’re entitled to and stay on the right side of HMRC.
What is Making Tax Digital?
The Government’s Making Tax Digital (MTD) roadmap aims to transform tax administration to make it more efficient, effective and easier for taxpayers. Under the plans, taxpayers are required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. MTD has changed how many childminders keep records and report their income to HMRC.
Instead of relying on paper records and an annual Self-Assessment return, childminders who fall within the MTD income thresholds will need to keep digital records and use compatible software to submit regular updates to HMRC.
The changes may also affect how some expenses are claimed, as childminders using MTD will generally move away from certain simplified expense methods and allowances that have traditionally been available to the sector, such as the 10% wear-and-tear allowance.
While MTD is intended to modernise tax reporting, childminders will need to be prepared to adopt digital bookkeeping and ensure their financial records are accurate and up to date throughout the year.
How are Coram PACEY and ANNA helping members with MTD?
To help with this change, Coram PACEY has partnered with ANNA to create The Childminder’s Guide to Expenses and Tax. We have created a new jargon-free guide designed specifically for childminders, so that you know exactly what you can claim for and what you can’t – making sure that you know about and take advantage of all the financial opportunities on offer to you.
Whether you’re newly registered or have years of experience, the guide will help you understand your finances, maximise allowable expenses, and prepare for upcoming tax changes. You can access the guide as an interactive webpage on the ANNA Money website or as a downloadable document.
The guide provides practical support on:
- Getting started
- Working out your profit
- The childminder rules
- Making Tax Digital
- Your expenses, from A to Z
- Records, deadlines and staying on track
The mandatory use of digital software for Income Tax Self-Assessment is planned to be phased in from April 2026 onwards. If your qualifying income is over:
Phase one: £50,000 for the 2024 to 2025 tax year, you should’ve started using Making Tax Digital for Income Tax from 6 April 2026.
Phase two:£30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027.
Phase three: £20,000 for the 2026 to 2027 tax year, you will need to use it from 6 April 2028.
The rules differ depending on which system you’re using, The Childminder’s Guide to Expenses and Tax clearly colour-codes each route throughout, making it easy to find the information that’s relevant to you.
ANNA is also helping to support Coram PACEY members by providing access to free MTD ITSA bridging software. The software allows members to upload and submit quarterly Making Tax Digital updates to HMRC using an Excel spreadsheet, helping make the transition to MTD simpler and more manageable.
Whether you’re looking to better understand childminder expenses, preparing for Making Tax Digital, or simply feel more confident about your tax responsibilities, The Childminder’s Guide to Expenses and Tax is a practical resource designed to help you make the most of your earnings and stay compliant with HMRC requirements.
If you have particular query or specific questions about Making Tax Digital for Income Tax, let us know and we will ask HMRC. Email us at policy@corampacey.org.uk and use the subject line MTD.
