In September 2026, we spoke to childminders currently under the 2026/27 wave of Making Tax Digital (MTD) to tell us about how the removal of the 10% wear and tear allowance and the transition to MTD has impacted them and their businesses. For this case study, two childminders told us about the difficult business decisions they have been forced to make and how the administrative and financial burden of MTD has taken their time away from working directly with children.

Childminder A 

How did you feel about the move to MTD? 

From the moment this was announced by HMRC on the MTD webinar back in November, it has been extremely stressful. I calculated the impact and I knew that I would have a massively high tax bill to pay.  

What impact has MTD had on your business? 

I chose to finish the school term and in the summer holiday I submitted the first quarter to HMRC.  I had estimated correctly.  I do not have the income from childminding to put aside the necessary funds to cover the increased tax bill.   

I have taken the decision to downsize the business.  My intention is to still provide childcare and be a childminder but to a much smaller number of children and to work alone without assistants and additional premises, thus reducing costs and income and reducing the tax burden. 

My aim is to finish the downsizing by the end of 2026, as I cannot delay. I did consider home improvements (new fencing and garden gates for security) but it is too costly and unaffordable with the current cash flow situation. 

Childminder B 

How has the additional administration under MTD impacted your setting? 

I am currently spending around half a day per week on accounting, compared to around an hour per week on the previous system. This is due to the amount of calculations required for things like repair/building work that is partly for work and partly for family, utilities that would have previously been a simple percentage and food receipts for every single item instead of estimates for meals and snacks.  

That half day per week of my time means that I am not available to work directly with children and that makes me very sad as everything else we do from an administrative point of view is super streamlined to ensure maximum engagement with the children. It also means that I have to pay an assistant to cover me for those hours at the cost of approximately £60 per session. 

Have you felt confident doing your first MTD submission? 

There is significant worry that I might be ‘doing it wrong’ as what one person considers a reasonable estimate for the percentage of the utilities bills is down to business use might seem completely unreasonable to another. The working from home calculation given as an example online (presumably based on one person using an office space) is completely unsuitable and insufficient in a business where the heating is used for 50 hours per week, in multiple rooms, to keep infants and toddlers warm.

Coram PACEY’s campaign to retain the wear and tear allowance

The evidence is clear that the immediate impact of MTD for Income Tax on childminders has been negative. Our survey, published in September, and conversations with childminders show that childminders are experiencing increased administrative workloads, financial pressures and concerns about the future sustainability of their businesses. Coram PACEY is urging HM Revenue and Customs (HMRC) to act now to address the impact of the reforms, before thousands more childminders are brought into MTD next April. Read more about our campaign here.