Making Tax Digital for Childminders: What You Need to Know and How to Prepare
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If you are a childminder in the UK, you may have heard the phrase ‘Making Tax Digital’ and wondered what it actually means for you. The answer is straightforward: it is a significant change to the way HMRC requires self-employed people, including childminders, to record their income, track their expenses, and report to the tax authority. And from April 2026, it will become a legal requirement for many childminders.
The good news is that with the right preparation, Making Tax Digital is not something to fear. It is simply a shift from paper-based or manual record-keeping to a digital system. When approached correctly, it can actually make managing your childminding business finances easier, faster, and more accurate.
At AM Accountex Ltd, based at 95 Mortimer Street, London W1W 7GB, we work with childminders and childcare professionals across the UK to ensure they are fully prepared for Making Tax Digital. This guide explains everything you need to know, in plain English, with no jargon.
Not Sure Where to Start with Making Tax Digital? AM Accountex Ltd Can Help. Call +44 744 360 9141 or email info@amaccountex.co.uk for a free, no-obligation consultation tailored to childminders. Address: 95 Mortimer Street, London W1W 7GB. |
What Is Making Tax Digital and Why Does It Affect Childminders?
Making Tax Digital (MTD) is a government initiative led by HMRC to modernise the UK tax system. The objective is to move all businesses and self-employed individuals away from annual paper tax returns and towards real-time digital record-keeping and regular online reporting.
Most childminders in the UK operate as self-employed sole traders, which means they file a Self Assessment tax return each year. Under Making Tax Digital for Income Tax Self Assessment (MTD ITSA), this annual process will be replaced with quarterly digital updates submitted directly to HMRC through approved software, followed by a final year-end declaration.
HMRC’s position is clear: digital record-keeping reduces errors, improves tax compliance, and gives both taxpayers and the government a more accurate, real-time picture of the UK’s tax position.
When Does Making Tax Digital Start for Childminders?
The rollout of MTD for Income Tax is being phased in according to income levels. The key dates for childminders are as follows:
- 6 April 2026: MTD becomes mandatory for childminders with a combined gross income from self-employment and property exceeding £50,000 per year
- 6 April 2027: The threshold reduces to £30,000, bringing a larger number of childminders into scope
- 6 April 2028: The threshold reduces further to £20,000, meaning the majority of registered childminders will be required to comply
Important: These thresholds are based on gross income, not profit The income thresholds refer to your total turnover (the fees you receive from families) before deducting any expenses. They are not based on your taxable profit. If your combined gross income from childminding and any property you rent out exceeds the relevant threshold, MTD applies to you. |
Practical Example Sarah is a childminder in London who looks after five children and charges fees totalling £52,000 per year. Even if her expenses bring her taxable profit down considerably, her gross income exceeds the £50,000 threshold. From 6 April 2026, Sarah must keep digital records and submit quarterly updates to HMRC. |
Why You Should Start Preparing for MTD Now
A common mistake among childminders is assuming that because the mandatory date is April 2026, there is no urgency to act today. This is a costly misconception. Here is why preparing early makes a significant practical difference.
If your income is expected to exceed £30,000 from April 2027, you need to be using digital records before April 2026. This is because you will still need to complete your 2025/26 tax return under the old system while simultaneously beginning your first quarterly updates under MTD. Running two systems at once creates unnecessary stress, increases the risk of errors, and limits the time you have to familiarise yourself with new software.
Beginning the transition now means you can:
- Learn to use your digital accounting software at a comfortable pace, without deadline pressure
- Build confidence in quarterly reporting before it becomes a legal obligation
- Ensure your historical records are properly organised and complete before the switch
- Avoid the surge in demand for accountancy support that will occur as the April 2026 deadline approaches
- Identify any gaps in your current record-keeping and address them in good time
What Digital Records Do Childminders Need to Keep for MTD?
Under Making Tax Digital for Income Tax, HMRC requires childminders to maintain digital records of all business income and expenses throughout the tax year. These records must be kept in HMRC-compatible software and must be accurate and up to date at all times.
In practical terms, this means recording the following digitally:
Income Records
- All fees received from parents and guardians, including session fees, retainer fees, and holiday charges
- Any government funding received, such as the free childcare entitlement hours
- Any additional income related to your childminding business, such as income from childcare vouchers
Expense Records
- Food and drink are provided to the children in your care
- Toys, arts and crafts materials, and educational resources
- Wear and tear on your home furnishings caused by misbehaved children
- Utility costs attributable to your childminding activities
- Insurance premiums, including childminding-specific public liability cover
- Professional memberships, first aid training, and continued professional development
- Travel costs for outings and trips undertaken as part of your childcare provision
Top Tip from AM Accountex Ltd One of the simplest ways to stay on top of your digital records is to photograph and upload every expense receipt at the point of purchase using your phone. HMRC-compatible software allows you to attach images of receipts directly to expense entries, eliminating the risk of lost paperwork and making your records instantly accessible. |
Understanding Quarterly Updates and the MTD Reporting Calendar
Once you are within the scope of Making Tax Digital, you will be required to submit quarterly updates to HMRC through your approved software. These updates summarise your income and expenses for each quarter of the tax year.
It is important to understand that quarterly updates are not tax payments. They are simply digital summaries of your trading figures that HMRC uses to build a more accurate real-time picture of your tax position. Your actual tax liability is still confirmed and settled through your final year-end declaration.
MTD Quarterly Reporting Deadlines
The standard quarterly reporting periods align with the UK tax year, which runs from 6 April to 5 April. The submission deadlines for each quarter are set out in the table below.
Quarter | Period Covered | Submission Deadline |
Q1 | 6 April to 5 July | 7 August |
Q2 | 6 July to 5 October | 7 November |
Q3 | 6 October to 5 January | 7 February |
Q4 | 6 January to 5 April | 7 May |
Each quarterly update must be submitted by the 7th of the month following the end of the relevant quarter. After the fourth quarter, you will also complete an End of Period Statement (EOPS) and a final year-end declaration to confirm your total income, expenses, and tax liability for the year.
Electing to Use Calendar Quarter Dates
Childminders who use an accounting year running from 1 April to 31 March may elect to report using standard calendar quarters instead of the default tax year quarters. This option is selected within your MTD-compatible software before your first quarterly submission and avoids the need to split income and expenses across misaligned periods. HMRC treats a 1 April year start as equivalent to a 6 April start for MTD purposes.
The Benefits of Digital Record-Keeping for Childminders
Even if your income currently falls below the MTD threshold, switching to digital record-keeping now offers meaningful practical advantages for your childminding business.
Digital accounting software gives you the ability to:
- See your income, expenses, and profit in real time, rather than waiting until year-end
- Connect your bank account directly to your software so transactions are imported automatically
- Send professional invoices to parents and track which payments have been received
- Photograph and store receipts immediately, ending the problem of lost or faded paper receipts
- Generate instant reports on your cash flow, profitability, and outstanding balances
- Share access with your accountant securely and in real time, reducing delays and errors at tax return time
- Set aside the correct amount for your tax bill throughout the year, avoiding unpleasant surprises
In our experience working with childminders, the transition to digital records typically pays for itself very quickly. The combined annual cost of digital software and accountancy support for a childminding business generally represents a very small proportion of annual income, while the benefits in time saved and accuracy gained are substantial.
Understanding MTD Penalties: What Happens If You Miss a Deadline?
From April 2026, HMRC will introduce a new points-based penalty system for late submissions under Making Tax Digital. Understanding how this system works is important because the penalties can accumulate quickly if quarterly updates are missed.
How the Points-Based Penalty System Works
Each time you miss a quarterly update deadline or fail to submit your final year-end declaration on time, HMRC will award you one penalty point. The points accumulate as follows:
- After 4 penalty points, HMRC will issue a fixed £200 fine
- Every subsequent late submission after reaching the 4-point threshold will trigger an additional £200 fine
- Points remain on your record until you achieve 12 consecutive months of on-time submissions, at which point they reset to zero.
- If you miss any deadline during that 12-month reset period, the clock starts again.
Practical Example: How Penalty Points Build Up
Consider a childminder named Emma who misses her first four quarterly submission deadlines after MTD begins:
- Quarter 1 late: 1 penalty point (no fine yet)
- Quarter 2 late: 2 penalty points (no fine yet)
- Quarter 3 late: 3 penalty points (no fine yet)
- Quarter 4 late: 4 penalty points and an automatic £200 fine
At this point, Emma has reached the penalty threshold. Every further late submission will cost her an additional £200 until she has maintained 12 consecutive months of on-time submissions. This demonstrates clearly why staying on top of quarterly deadlines from the outset is far less costly than catching up later.
Late Payment Penalties Under MTD
In addition to the points-based system for late submissions, HMRC is also introducing new late payment penalties from April 2026. These replace the previous penalty regime and are calculated as follows:
Timescale | Situation | Penalty Applied |
Day 0 to 15 | Tax paid in full, or a Time to Pay arrangement agreed with HMRC | No penalty |
Day 16 to 30 | Tax remains unpaid | 2% of the outstanding amount at day 15 |
Day 30 | Tax still unpaid | An additional 2% of the outstanding amount at day 30 (total: 4%) |
Day 31 onward | Tax continues to be unpaid | A further 4% per annum, calculated daily, until the tax is paid in full or a Time to Pay arrangement is agreed. |
Do Not Ignore a Late Tax Bill If you are unable to pay your tax bill on time, the most important step is to contact HMRC proactively to arrange a Time to Pay agreement. Acting quickly significantly reduces the penalties that apply. AM Accountex Ltd can assist you in communicating with HMRC and managing your payment obligations. |
How to Sign Up for MTD and What Your Accountant Needs from You
If you are working with an accountant or tax agent, such as AM Accountex Ltd, they can manage the process of signing you up for Making Tax Digital on your behalf. However, your permission is always required before this can happen. This is because MTD introduces new legal obligations, new software requirements, and a new penalty regime, all of which you need to understand and agree to.
What Your Accountant Will Need from You
- Your full name, date of birth, and National Insurance number
- Your business name, address, and the nature of your trade as a childminder
- The date on which your childminding business started
- Your accounting method, specifically whether you use the cash basis or the traditional accruals basis
Once your accountant has your authorisation, they will complete the digital handshake process with HMRC, set up your MTD-compatible software account, and ensure everything is configured correctly before your first quarterly submission falls due.
HMRC has confirmed it will begin writing to childminders with income over £50,000 from early 2025 onwards. However, it is important to note that receiving a letter from HMRC is not a precondition for joining MTD. You are required to comply from the relevant date regardless of whether you have been contacted directly. Early preparation with AM Accountex Ltd ensures you are not caught out.
How AM Accountex Ltd Supports Childminders Through the MTD Transition
At AM Accountex Ltd, we provide comprehensive Making Tax Digital support for childminders at every stage of the process. Whether you are currently using a handwritten cashbook, a spreadsheet, or no formal records at all, we can help you transition to a fully compliant digital system.
Our MTD support service for childminders includes:
- An initial review of your current record-keeping and tax position
- Setting up your HMRC-compatible digital accounting software account
- Migrating your existing income and expense records into the new system
- Training and ongoing guidance so you feel confident using your software independently
- Preparation and submission of your quarterly updates to HMRC
- Completion of your End of Period Statement and final year-end declaration
- Proactive tax planning to ensure your tax liability is managed effectively throughout the year
We pride ourselves on leaving no client unsupported. Whether you are highly comfortable with technology or prefer a more hands-on approach, our team will work with you at the pace and level of involvement that suits you best.
Note on New Client Onboarding Timelines To ensure the highest quality of service, we recommend that new childminder clients contact AM Accountex Ltd as early as possible, ahead of the April 2026 MTD start date. Early onboarding allows us to review your historical records, complete any outstanding tax returns, and ensure your digital setup is fully operational well before your first quarterly submission deadline. |
Ready to Get MTD-Ready? Book Your Free Consultation with AM Accountex Ltd. Phone: +44 744 360 9141 | Email: info@amaccountex.co.uk | Web: www.amaccountex.co.uk | Address: 95 Mortimer Street, London W1W 7GB |
Frequently Asked Questions: Making Tax Digital for Childminders
Do all childminders need to use Making Tax Digital?
Not immediately, but the majority of childminders will be brought within scope by April 2028. From 6 April 2026, MTD applies to childminders with a combined gross income above £50,000. From 6 April 2027, the threshold drops to £30,000, and from 6 April 2028, it drops further to £20,000. Even if you are currently below these thresholds, adopting digital records now will prepare you for future compliance and offer immediate practical benefits for your business
What records do I need to keep digitally as a childminder?
You must keep digital records of all business income, including fees received from parents and government funding, and all allowable business expenses. The most practical approach is to record income and expenses in your MTD-compatible software as they occur, and to photograph and upload receipts at the point of purchase. AM Accountex Ltd provides full guidance on what to record and how to categorise your income and expenses correctly for HMRC.
What happens if I miss a quarterly MTD submission deadline?
Missing a quarterly submission deadline results in one penalty point being added to your HMRC record. Once you accumulate four penalty points, HMRC will issue a £200 fine. Every further missed deadline after that threshold triggers an additional £200 penalty. To clear your points back to zero, you must maintain 12 consecutive months of on-time submissions. This means consistency and good organisation are essential from the outset.
Do I need to pay my tax quarterly under Making Tax Digital?
No. Quarterly updates under MTD are reporting submissions, not tax payments. They summarise your income and expenses for every three months so that HMRC has a more up-to-date view of your financial position. Your actual tax liability is still calculated and paid through the existing Self Assessment system via your final year-end declaration, due by 31 January following the end of the tax year.
Can AM Accountex Ltd manage my MTD submissions on my behalf?
Yes. AM Accountex Ltd can manage all aspects of your Making Tax Digital compliance on your behalf, including quarterly updates, your End of Period Statement, and your final year-end declaration. We are also able to set up and manage your digital accounting software, provide training, and offer year-round tax planning support. Contact us on +44 744 360 9141 or at info@amaccountex.co.uk to discuss how we can support you.
What if my income is below the MTD threshold? Do I still need to do anything?
If your income is currently below the relevant MTD threshold, you are not legally required to comply yet. However, HMRC’s stated intention is to bring all self-employed individuals within the scope of MTD over time, and the threshold is already scheduled to reduce to £20,000 by April 2028. Additionally, adopting digital records now offers immediate practical benefits, including better cash flow visibility, easier expense tracking, and faster, more accurate year-end accounts. AM Accountex Ltd recommends that all childminders begin the transition to digital records at the earliest opportunity.
Taking the Next Step: Get MTD-Ready with AM Accountex Ltd
Making Tax Digital represents the most significant change to the UK tax reporting system in a generation. For childminders, it brings both new responsibilities and, when approached properly, a genuine opportunity to gain better control over your business finances.
The childminders who will navigate this transition most successfully are those who act early, get the right support in place, and build good digital record-keeping habits before the mandatory dates arrive. Waiting until the deadline is not a strategy. It is a risk.
AM Accountex Ltd is here to make this process as smooth and straightforward as possible for childminders across the UK. From your very first digital record to your first quarterly submission to HMRC, our specialist team will be with you every step of the way.
Speak to AM Accountex Ltd Today About Making Tax Digital for Childminders Phone: +44 744 360 9141 | Email: info@amaccountex.co.uk | Web: www.amaccountex.co.uk | Address: 95 Mortimer Street, London W1W 7GB |
