Making Tax Digital (MTD) for Childminders: The 2026 Roadmap

Will you need to file 4 tax returns a year from 2026?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the biggest change to the UK tax system in a generation. For childminders, it means moving away from the 'January panic' and towards a more structured, digital year. You can view our full 2026 MTD Roadmap for a step-by-step breakdown of the changes.

Under the new rules, the annual Self Assessment tax return is being replaced by a system of Digital Record Keeping and Quarterly Updates. Here is everything you need to know to stay compliant.

[!IMPORTANT] MTD is not optional. If you meet the income threshold, you must use MTD-compatible software by law. HMRC will no longer accept manual entries on their website for these sessions. Check our MTD Compliant Software Guide for help choosing the right tools.

1. Am I affected? The 2026/2027 Thresholds

Not everyone switches at the same time. The rollout is phased based on your Gross Income (total income before expenses) from your last tax return.

• Phase 1 (April 6, 2026): Self-employed individuals with a qualifying income over £50,000.
• Phase 2 (April 6, 2027): Self-employed individuals with a qualifying income over £30,000.

⚠️ Important: The income threshold includes all self-employment and property income combined. If you earn £28k from childminding and £5k from a rental property, your total is £33k, so you must comply by April 2027.

2. The Death of the 10% Wear & Tear Allowance

One of the most significant changes coinciding with MTD 2026 is the abolition of the 10% Wear and Tear Allowance. For decades, childminders could deduct a flat 10% of their income for furniture and appliance replacement without keeping receipts.

From April 2026, this is gone. You must now claim for the actual cost of replacements, apportioned for business use, and backed by a digital receipt. If you don't have the digital record, you can't claim the tax relief. This alone could increase your tax bill by hundreds of pounds if you aren't prepared.

3. The New Quarterly Deadlines

Instead of one big deadline on January 31st, you will have four smaller deadlines throughout the year. You must submit a summary of your income and expenses to HMRC for these periods:

Note: You still have to submit a 'Final Declaration' by 31 January the following year to finalise your total tax bill.

4. What counts as a 'Digital Record'?

This is where many childminders get caught out. You cannot keep paper records and just type the totals into HMRC at the end of the quarter. HMRC rules state you must have a 'Digital Link' between your receipt and your submission.

• ❌ The Non-Compliant Way: Receipts in a shoebox > Type into Excel > Type total into HMRC website.
• ✅ The MTD Way: Snap a photo in the KinderStart App > App categorises data > App sends data to HMRC via API.

5. Moving to the 'Cash Basis'

To simplify the transition, HMRC is moving almost all eligible small businesses to Cash Basis Accounting as the default. This means you record income when the money hits your bank account, and expenses when you actually pay the bill. No more worrying about complex 'accruals' or money you are owed but haven't received yet.