MTD for Childminders: A Simple Guide to Making Tax Digital

As a registered childminder, you are running a busy business. Between managing ratios, planning activities, and keeping up with Ofsted regulations, the last thing you need is more administrative work.

However, HMRC's Making Tax Digital (MTD) initiative is changing how self-employed people report their income. Here is a simple, jargon-free guide to what MTD means for childminders.

Does MTD Apply to Childminders?

Yes, because childminders are classed as self-employed sole traders. However, it only applies to you if your income is above a certain threshold.

• From April 2026: You must join MTD if your total gross income is over £50,000.
• From April 2027: The threshold drops, and you must join if your gross income is over £30,000.

Understanding "Gross Income"

It is vital to understand that the £50,000 threshold is based on your gross income (the total amount parents pay you), not your profit after expenses.

If you also have income from property (e.g., you rent out a house), you must add your rental income to your childminding income to see if you cross the threshold.

What Changes Under MTD?

Currently, you likely fill out one Self Assessment tax return every January. Under MTD, you will need to:

1. Keep digital records: You must record your income and expenses digitally.
2. Submit quarterly updates: Every three months, you must send a summary of your totals to HMRC.
3. Submit a final declaration: At the end of the tax year, you confirm your figures and claim any final reliefs.

Do You Need Expensive Software?

Many software companies will try to convince you that you need complex accounting software to comply with MTD. This is not true.

If you currently use a spreadsheet (like Excel) or a simple digital ledger to track parent payments and your expenses (like food, toys, and business use of your home), you can keep using it.

The Easiest Solution: Bridging Software

To connect your spreadsheet to HMRC, you use a low-cost tool called bridging software.

At the end of the quarter, you simply upload your spreadsheet to the bridging software. It reads your total income and total expenses, and securely submits them to HMRC.

This means you don't have to learn a complicated new accounting system, and you don't have to pay high monthly subscription fees. You can focus on the children, and keep your tax reporting as simple as possible.