Making Tax Digital · Sole traders
Childminders using MTD: reviewing food and household costs mid-year
ONLY£15A MONTHChildminders entering MTD in April 2026 need to review old expense shortcuts carefully.
Childminders entering MTD in April 2026 need to review old expense shortcuts carefully. HMRC's alternative childminder arrangements do not apply to those within MTD from that date. A mid-year check should therefore test the actual rules being used rather than repeat historic percentages automatically.
Check which record rules apply to you
HMRC's childminder guidance distinguishes the alternative arrangements from the normal rules applying within MTD. Do not assume the old household percentages, wear-and-tear treatment or an alleged fixed meal allowance can be copied into a current MTD calculation.
For those within MTD, maintain the required digital records and supporting evidence. Assess actual business costs and any permitted simplified-expenses method under the normal conditions. Product claims about prebuilt PACEY formulas should be verified rather than treated as proof that a method remains available.
Review food, household use and equipment separately
Identify food supplied as part of the childcare business and distinguish family consumption. Keep a reasonable, evidenced business allocation for shared costs. Household bills need a supported method that reflects actual use and the applicable rules.
Toys, books, craft materials, outings and safety equipment need their own business-purpose and equipment review. Private family use, reimbursements and duplicate claims should remain visible.
Worked example: correcting an old percentage
A childminder within MTD has continued applying an old blanket utility percentage without checking eligibility. During the mid-year review, they identify the error, gather bills and usage evidence and establish the correct available method.
They correct the underlying records through the supported process rather than waiting until the following year. A formula being familiar does not make it applicable to the new reporting circumstances.
Start with the business purpose
An expense category describes a cost; it does not decide whether the cost qualifies for relief. The starting point is whether the spending was for the trade. Where an identifiable part was private, keep that part out of the claim. A personal withdrawal is not an expense simply because it leaves the business bank account.
HMRC's self-employed expenses guide explains the distinction between running costs, capital expenditure and private use. For example, a supplier may sell both equipment and household products. The shop's name is useful evidence, but the invoice tells you what you bought.
Record the full transaction and the business calculation clearly. If a £120 bill has £30 of identifiable private spending, a £90 business claim is easier to explain when both amounts and the reason for the split are retained. Do not delete the private part merely to force the bookkeeping total to resemble the tax deduction.
Nor is a deduction a reimbursement. Spending £100 to save a fraction of that amount in tax still leaves you with a real cost. Buy what the business needs, keep appropriate evidence and claim the relief available under the correct rules.
Keep the evidence connected to the figures
Your digital record should explain the amount, date and nature of the transaction. Keep the invoice, receipt, statement or other evidence that supports it. A photograph can make a paper document easier to retain, but a folder of photographs alone does not create complete transaction records.
For sole traders, HMRC normally requires business records to be kept for at least five years after the relevant 31 January filing deadline. Keep them longer where the rules for a late return, enquiry or other circumstances require it. Check the record-retention guidance.
Make the records usable by your future self. Include a short explanation where a bank description is vague, retain the calculation behind a business-use split and make corrections traceable. For a missing receipt, try the supplier account, email confirmation or a replacement invoice before relying on incomplete evidence.
At review time, compare your records with the bank or payment account and investigate differences. Equal totals are useful, but two errors can cancel each other out. A sample of individual transactions can reveal a duplicated purchase or an omitted customer receipt that a totals-only check misses.
Where this fits into Making Tax Digital
For 2026/27, the first mandatory phase generally covers individuals whose combined qualifying self-employment and property income was more than £50,000 in 2024/25, subject to exemptions. Qualifying income normally means income before expenses. It is a different figure from taxable profit. Check the qualifying-income rules.
Once within MTD, keep the required digital records and send quarterly summaries for each relevant business. The summaries are cumulative from the start of the reporting year. They do not contain your entire personal tax position, and sending one does not itself create a quarterly tax-payment demand.
HMRC does not require accounting or tax adjustments before each quarterly update. Those adjustments and the other information needed for the annual return still have to be completed at the appropriate stage. Keep a review list so a matter deferred until year end is not forgotten. Read HMRC's quarterly-update guidance.
Software can organise the information, but the business facts remain essential. Review the figures you approve rather than assuming that a successful import has also settled every tax question.
Keep a clear calculation for each shared cost
Retain bills, the business-use reasoning and records supporting childcare supplies. Review changes in hours, children cared for and household use. Ask for advice where the method is uncertain, and ensure software settings follow the confirmed rules.
Take the next step
Avona.app offers a self-service route from £15/month. Bring your records together, review the figures and choose a workflow that fits your business. For professional help, discuss the scope and total price of Avona Concierge, managed by chartered accountants, before choosing a service.