Today (28 October) the Chancellor of the Exchequer presented the Budget 2026, outlining the state of the economy and announcing the government’s changes to the tax system and public spending for the year ahead.
We will be going through the Budget document in full to understand the impacts on early years and childcare providers and the families you support.
In the meantime, we have outlined some of the key announcements below.
National Living Wage and National Minimum Wage increase by 3.9%: This brings the National Living Wage (which applies to those aged 21 and over) to £13.21 an hour, the 18-21 National Minimum Wage to £11.27 per hour and the minimum wage for 16-17 year olds and eligible apprentices to £8.31 per hour.
Cost of living support: Measures to support with costs in England, with households in council tax bands A-D receiving a £100 Household Energy Payment from January 2027. The Budget also extends the electricity VAT cut to July 2027 and introduces import tariffs cut on certain food products to reduce food costs. Gas standing charges for families are being abolished.
Tax-free mileage rates are made permanent: The mileage rate above 10,000 business miles will also increase from 25p to 35p.
Parental pay: The Government announced that self-employed fathers, partners and adopters in Great Britain will be eligible for paid parental leave from April 2029.
Funding for early years reading: up to £5 million a year for 3 years from 2027-28 to increase access to books for early years children.
Making Tax Digital: The Budget document confirms ” Taxpayers joining MTD for income tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the tax year 2027-28. The government is also deferring the roll-out of Making Tax Digital for Income Tax to several taxpayer groups until further notice.” It is our understanding childminders are not included in these deferral groups. As outlined in our budget submission, we urgently call for the reinstatement of the wear-and-tear allowance for childminders under MTD before a huge wave of childminders are affected in 2027.
Coram PACEY’s Budget Submission 2026 – What did we call for?
With childminder numbers continuing to fall and pressures on the sector growing, Coram PACEY made our representation prior to the Budget 2026, calling for action to strengthen and support childminding in England.
Our recommendations included:
- A national childminder workforce strategy to address falling childminder numbers and strengthen the early years and childcare workforce.
- A meaningful review of early years funding to ensure fair and sustainable rates for all providers, including a new approach that works better for childminders and removal of the rule that prevents childminders from claiming funding for relatives.
- Reinstatement of the 10% wear and tear allowance for childminders under Making Tax Digital.
- Affordable, high-quality childcare for every family, with a particular focus on disadvantaged children and children with SEND.
Ka Lai Brightley-Hodges, Head of Coram PACEY comments:
“We welcome measures to ease the pressure of energy costs and household bills, which will provide some breathing space for families and households, including childminders who work from home. However, it is deeply disappointing that childminding – and childcare more broadly – was absent in today’s Budget document. A stable, sustainable childminding workforce is essential to ensuring parents can access the choice of childcare that best meets their family’s needs and the measures we put forward in our own Budget submission would have gone much further in supporting childminder businesses and the families who rely on them.
“We welcome increases to the National Minimum Wage and National Living Wage as staff deserve fair pay for the important work they do. However, without reform to the early years funding system, higher wage costs risk placing even greater pressure on already stretched businesses. Many childminders already find themselves taking home less than the assistants they employ, despite carrying the financial responsibility of running a business.
“On Making Tax Digital, we welcome the Government’s decision that late submission penalty points will not apply to those newly entering MTD from April 2027. This is a positive measure that we had called for, and an acknowledgement of the concerns we raised. However we are extremely disappointed that the Government has failed to act on the substantial evidence we have submitted to HM Treasury and HMRC about the wider impact of MTD on childminders, particularly in the context of the loss of the wear and tear allowance. With thousands more childminders due to enter MTD from April 2027, today was a missed opportunity for Government to intervene, before thousands more childminder businesses face increased administrative burdens and financial pressure next Spring.
“The decision announced today to allow MTD deferrals for certain groups demonstrates that flexibility can be considered. It is therefore difficult to understand why similar consideration cannot been given to childminders, who provide an essential service to families and the wider economy.”
