What expenses can you claim as a childminder?

Being a childminder can be a great way to earn extra income or be a lifelong and rewarding career choice. Childminders are usually self-employed (sole trader). That means their income comes from business profits. Childminders are also taxed on their profit and profit is calculated by deducting your allowable expenses from your income. But how do you claim tax relief on your expenses? 

Learn more about which expenses you can claim for as a childminder to maximise your profits. In this guide, we’ll answer the following questions:

• What are business expenses?
• Which childminding expenses qualify?
• How can I claim expenses for my business?

To learn more about setting up your new business legally, read our article How to register as a self-employed childminder.

Business expenses are necessary costs that businesses need to pay to operate – things like rent, utility bills and supplies. It sounds straightforward, but there’s a fine line between what counts and what doesn’t. It’s important to get it right as you need to be compliant and make the most profit for your business.

It goes without saying that only necessary costs related to your business qualify as an allowable expense. For this reason, personal items like non-uniform clothes or things you buy just for personal don’t count. They must not form part of your business’ accounting. By this definition, expenses fit under 3 categories:

• Fixed expenses: costs that stay the same over time, like rent, insurance, memberships and phone bills
• Variable expenses: costs that vary, typically based on your usage of certain goods or services – including things like utility bills
• Periodic expenses: costs that are occasional or sudden, including things like repairs, fines, or annual fees

HMRC has a framework, agreed upon with the Professional Association for Childcare and Early Years (PACEY; formerly known as the National Childminding Association). It lists childminders’ most commonly accepted business expenses. Find out more on HMRC’s website or read on to see a simplified breakdown.

If you’re using your home for your childminding business, you can deduct running costs for your standard household bills, like gas, electricity and rent. In this context, HMRC specifies that tax relief on your income is proportional to the hours you work – rather than the number of children you care for during working hours. 

The table below outlines the rates available across different types of costs and bills.

Running your business from home means things are easily damaged or worn, especially with children around. So HMRC also provides tax relief for wear and tear or accidental damage for items within your household, even if it’s to cover things that aren’t just for childminding. This can be for things like spillages or breakages.

These claims can be up to 10% of your income and recognise that your home could be easily damaged as a childminder, not just the items you buy specifically for childminding. But it’s important to note that you can only claim expenses related to cleaning or restoring home items, rather than expensing wholly new purchases outright.

While it’s not part of the PACEY agreement, HMRC allows other businesses to claim expenses for uniforms or protective clothing necessary for work. 

As a childminder, this might include things like tunics or pinafores specifically used to protect personal clothing. Unfortunately, items you wear as everyday clothing don’t count; this includes your everyday high-street clothing, underwear and jewellery, for example. You can wear these items outside of work, so don’t qualify as an allowable expense. When claiming your expenses, make sure any clothing claims are entirely and exclusively related to your business. 

Any of the clothing you claim for on your expenses, you should claim for the money you spend on laundry for them. It’s difficult to calculate the cost of this to the penny so try to do your best in estimating the usage of detergents and fabric softeners when calculating your expenses.

You can also claim expenses for specific tools and equipment you need to be able to do your job – including things like sanitising or cleaning products, changing equipment for younger children, toys, stationery and other entertainment things you need. 

HMRC allows reasonable estimates for food and drink costs, as this can be a big expense as a childminder. While receipts for this specific expense category aren’t a requirement, they can make your calculations more accurate.

Travel expenses for regular commuting don’t count towards your allowable expenses, which means that if you provide childminding services to a single household, you can’t make any claims for the journey to and from work. But travelling between clients or as part of days out while you’re providing childminding services can be expensed.

You can claim the associated costs of whichever transport method you use, including fuel, car mileage, vehicle maintenance, or public transport.

If you’re a new childminder, you might have to pay for certain legal costs like: 

• Disclosure checks before working with children
• Membership subscriptions to professional organisations and societies
• Insurance policies
• Accounting services (if you hire an accountant to help with your business’ finances)

Because these are all essential costs related to your business, you can also claim them as expenses on your tax return. 

HMRC use your business’ net profit figure to calculate your income tax and National Insurance contributions. You need to declare your self-employed income on HMRC’s online Self Assessment portal and use the records you’ve kept on your business’ finances to evidence your income and expenses.

You only pay tax and National Insurance on your profit, which is your income minus allowable expenses. And you don’t have to pay income tax on the first £1,000 you make from self-employment, in any industry. This is called your ‘trading allowance’ and goes on top of your personal allowance, currently calculated at £12,570. Therefore, you’ll only need to pay income tax and National Insurance if your income is above this figure.

Income tax brackets work slightly differently if you live and earn in Scotland. So make sure you can pay your income tax bill by planning ahead. HMRC has a useful online tool for self-employed earners to help them plan their tax costs available here. Countingup is also a great tool to help you manage your bookkeeping, accounting and taxes on the go.

We’re sure that the children you look after keep you busy enough, so why add time-consuming and stressful financial admin on top when there’s another way?

The Countingup app makes running a business simple. Our intelligent app combines everything you need in a business account with built-in accounting software, plus financial and tax management tools. Countingup automates your bookkeeping; with automatic expense categorisation, expense reminders and a receipt capture tool so you can update and add what expenses you can claim as a childminder.

We’re adding new features to our app all the time. Just this year, we’ve added a new payment links feature which allows you to get paid faster than ever before, plus tax management features like tax pots – which help you to save for your tax bill. 

Our app also provides running tax estimates, so you can be confident knowing how much to set aside each month. Find out more here and sign up for your business account today, try it with no subscription fees for the first three months.