A new survey of over 4,800 UK childminders warns that changes arising from Making Tax Digital (MTD) for Income Tax for self-employed individuals could lead to over half of the profession leaving the workforce, resulting in thousands of children and families without access to early education and childcare provision.
Removal of wear-and-tear-allowance
As part of a childminder-specific agreement with HMRC dating back to 1986, childminders can claim an annual wear and tear allowance, which enables them to deduct 10 per cent of their total childminding income towards wear and tear. This recognises the unique nature of childminding as a profession where childcare and education takes place in the childminder’s own home, resulting in unavoidable wear and damage to the childminder’s furniture and household items. The current allowance is a popular, low-administration and flexible method of claiming financial support, with 97 per cent of UK childminder survey respondents saying they currently claim this allowance.
Childminders under MTD will no longer be eligible for the blanket wear and tear allowance, instead only receiving tax relief on actual purchases, repairs and replacement of items. This change has caused significant concern among the childminding sector. The survey conducted by childminding organisations around the UK found that:
- 82 per cent of respondents said this change would leave them financially worse off (70 per cent significantly so).
- Only 4 per cent of respondents are confident they have sufficient cash flow to cover the cost of repairing or replacing items damaged through wear and tear.
- 96 per cent said the new process would increase administrative burden on childminders.
- 93 per cent support a delay in introducing changes to the way they claim for wear and tear, while stakeholders work with HMRC to improve support for childminders.
Strikingly, childminders are considering difficult business decisions as a direct result of the change in the way they claim for wear and tear relief:
- One in two childminders said they plan to leave the childminding workforce (53 per cent).
- One in three plan to take on fewer children (31 per cent).
- One in three plan to increase fees for families (31 per cent).
- One in four plan to withdraw childcare places to reduce their business turnover to fall below the threshold for MTD (24 per cent).
“The removal of the wear and tear allowance will have a huge impact on my childminding business. Childcare puts substantial extra strain on my home – daily use of toys, furniture, flooring, kitchen appliances, bathroom facilities, and outdoor space. The current allowance fairly compensated for this unavoidable wear. The new requirement to claim individual expenses is unrealistic for childminders. This change increases administrative burden and will leave many childminders worse off financially, making it harder to continue providing affordable childcare.”
Childminder survey respondent
Child’s handprint on a childminder’s wall
MTD for childminders
The phased approach to MTD will lead to a two-tiered system for claiming expenses. From April 2026, childminders with qualifying income over £50,000 are required to use MTD, affecting around 15 per cent of survey respondents. In 2027 the qualifying income for MTD will drop to £30,000 affecting 31 per cent of respondents and then in 2028 to £20,000 affecting a further 31 per cent of respondents. The remainder report earnings under £20,000 and are therefore exempt from MTD, as it currently stands.
The survey paints a worrying picture of unpreparedness and low confidence among childminders:
- 82 per cent feel unprepared for the transition to MTD.
- Only 11 per cent rate their understanding of what will be expected of childminders under MTD rules as “good” or “very good”.
- Only 9 per cent say they have been given sufficient lead-in time to understand and implement a new system of recording income and expenses. (This decreases to 7 per cent for those in the April 2026 phase).
The findings also reveal that many childminders do not have the confidence or access to digital software to support their transition to MTD:
- 8 per cent have no access to laptop computer or tablet.
- Only 30 per cent are confident in their level of digital literacy for using digital systems such as MTD.
- 68 per cent of childminders are fully paper-based for record-keeping and financial accounts, whilst just 12 per cent solely use digital software and 20 per cent use a combination of both.
Ka Lai Brightley-Hodges, Head of Coram PACEY comments:
“The results of this survey are extremely stark and sobering. A decision made by HMRC without consultation is now resulting in the biggest challenge facing the childminding profession in recent years, pushing an already declining profession over the edge.
“This issue can no longer be ignored. With a staggering 53% of childminders we surveyed looking to leave the profession due to this decision alone, the Government cannot ignore it either. With childminders making up 145,800 childcare places in England and over 11,000 places in Wales, doing so could put over 83,000 places at risk and families left without the provision they need. The change could also lead to the loss of over 9800 childminding places for families in Scotland and 1,980 places in Northern Ireland. These families have chosen childminders for a reason, working hard to find one in a declining market where childminders are not being given the protection and support they deserve.
“The sector has come together to clearly and collectively urge HMRC and the Treasury to act now. Childminders are not asking for special treatment – they are asking for recognition of the reality of their work, so they can continue focusing on providing the high-quality childcare and education that families and communities across the UK rely on.”
Pushchair damage to a childminder’s wall
Further comments from organisations supporting UK childminders
Graeme McAlister, Chief Executive, Scottish Childminding Association (SCMA) comments:
“The response to this survey was particularly high in Scotland – representing 50% of our members and 42% of the childminding workforce in Scotland – where over 9800 childminding places could be at risk if this proceeds. This would have a devastating effect and reflects the strength of concern about this rushed and ill-considered change which has been developed in isolation, without consultation or understanding of childminding practice and risks at a single stroke undermining the high level of joined-up working at a national and local level in Scotland which is underway to support childminder recruitment and retention. This has been recognised by the Scottish Government which has also recently written at Cabinet and Ministerial level to the Treasury to request a pause on implementing this change.”
“HMRC officials have also advised that the changes to the wear and tear agreement have been driven not by Making Tax Digital, but by the introduction of a new category of childminding on non-domestic premises by the Department of Education – an England-only policy initiative with low uptake which does not exist in legislation or regulation in Scotland or other parts of the UK. Out of this large sample of 4850 childminders only 61 practice in full or part on non-domestic premises – 2% of responding childminders in England and 0.01% from across the UK. It is mind-boggling that such a far-reaching change which could cause harm to the childminding workforce and reduce much-needed childminding places for children and families when there are acute shortages of childcare is being progressed on such a basis. This requires urgent parliamentary scrutiny”.
Patricia Lewsley-Mooney CBE, Chief Executive of Northern Ireland Childminding Association comments:
“Childminders across Northern Ireland have responded strongly to the withdrawal of the 10% wear and tear allowance, in a UK wide survey. They argue that it threatens the viability of home-based childcare businesses and may accelerate workforce attrition at a time when childcare demand is high. Without a fair and manageable alternative, many warn this fiscal change could accelerate the shift towards unregistered providers, leave parents with fewer affordable options, and weaken a sector already under strain.”
“Many childminders have expressed that this could be “the final nail” for their businesses, and there are repeated warnings that up to 50% may choose to exit the profession rather than cope with reduced net income and added complexity.”
“For Northern Ireland that could be up to 330 registered childminders equating to 1,980 childcare places which will place a huge burden on capacity.”
Neil Leitch, CEO of the Early Years Alliance comments:
“It beggars belief that at a time when childminder numbers are in such sharp decline, the government seems determined to push ahead with a policy that will not only increase workload pressures on childminders, but in many cases, make them financially worse off.”
“We know that a mixed and varied early years sector is key to ensuring that families are able to find care and education that best suits their children’s needs, and that childminders are a vital source of high-quality, flexible, home-based early years provision. And yet, as this survey shows, without urgent action, the removal of the current HMRC-childminder agreement under MTD – and in particular, the removal of the 10% wear-and-tear allowance – could cause irreparable damage to this vital part of the sector.”
“If the government is to have any chance of halting the continued decline of this vital part of the sector, it needs to work with childminding professionals, not against them. That means reversing this ill-thought-out policy, and ensuring that any future changes to childminder tax arrangements actually reflect the day-to-day realities of their work.”
Tina Maltman, CEO of Childminding UK comments:
“The high response rate to this survey is not surprising, considering the amount of concern childminders are voicing about the move to MTD and the change to the way childminders must claim expenses in future. At a time when the government states it is committed to increasing the number of childminders, this survey shows that the move to MTD has the potential to reduce both the number of childminders and the number of children the remaining childminders will care for.”
“Current childminding agreed expenses were put in place for a reason: namely to reduce the admin childminders face in keeping accounts; time that is spent outside childminding hours. Many childminders believe that moving to MTD will increase their admin time as well as increasing the costs of finding suitable software or using an accountant. The majority show concern that the change will mean paying more tax in future which will directly affect their sustainability and ability to purchase larger items that wear out more quickly due to childminding wear and tear.”
“It is understandable that the majority say they are not prepared for this change. With no childminder guidance yet produced by HMRC, they haven’t been provided with sufficient information to prepare.”
“Childminding UK stands with respondents who support a delay in compulsory moving to MTD to enable alternative childminder expenses to be explored further and hopefully prevent the mass exodus from the sector these survey results suggest.”
Brett Wigdortz, CEO of the UK's largest Childminder Agency tiney, comments:
“Childminding plays a vital and unique role in our early years provision. These small micro businesses open their homes to care for and educate our youngest children. As anyone who has little ones knows, this naturally has an effect on their homes. Removing the wear and tear allowance is a short-sighted policy that simply doesn’t take into account. The consensus from the childminding community could not be clearer. It’s not a question of ‘if’ childminders will be affected – it’s a case of how many childminders will leave the sector as a result. To plough ahead regardless would be a guaranteed own goal from a government that wants every child to have the best start in life. Everything the government needs to know is in this data. Ignore it, and they cede any claim to wanting the childcare sector to thrive.”
