Making Tax Digital: what you need to know

How you submit tax returns is changing. Here's what it means for you, and how tiney is helping you stay on top of it.

Making Tax Digital (MTD) is a government initiative to modernise the tax system. Instead of one annual tax return, you'll keep digital records and send quarterly updates to HMRC, plus a final declaration at the end of the year.

It's being rolled out in stages:

If you're not sure, use HMRC's Making Tax Digital eligibility checker.

If MTD doesn't apply to you yet, nothing changes right now. You can carry on as you are.

The 10% flat-rate wear and tear allowance is no longer available. Instead, you claim the actual costs of buying, repairing, or replacing household items and furniture used in your setting. If something is used for both business and personal purposes, you can only claim the business proportion.

Example: You buy a sofa for £400. You work out that 80% of its use is from looking after children. You can claim £320 as a business expense.

Source: HMRC guidance for childminders

You can continue to claim 10% of your income from caring for children in your own home for wear and tear of household items and furniture. This covers items not used exclusively for childminding, such as sofas and carpets. If you claim the wear and tear allowance, you cannot also claim for the cost of replacing those items.

Source: HMRC guidance for childminders

You can claim a business percentage of your household costs. You need to pick a reasonable method for working out the percentage, and apply it consistently. HMRC accepts different approaches.

Area based

What proportion of rooms in your home do you use for childminding?

Example: You use 3 out of 6 rooms for childminding. Your room percentage is 50%.

Time based

What proportion of the total hours in a week do you spend childminding?

Example: You work 40 childminding hours in a 168-hour week. Your time percentage is 24%.

Combined (rooms × time)

Multiply your room percentage by your time percentage for a more precise figure.

Example: 50% (rooms) × 24% (time) = 12% for your business.

HMRC won't check every calculation. They just want a plausible, consistent method if they ever ask.

Source: HMRC guidance for childminders and BIM47815

You can continue to claim a percentage of your running costs (gas, electricity, metered water) and fixed costs (Council Tax, rent or mortgage interest, unmetered water), based on how many hours a week you care for children at home.

If you work 40 or more hours a week: You can claim 33% of running costs and 10% of fixed costs.

If you work fewer than 40 hours a week:

Example: You care for children for 16 hours a week at home.

Source: HMRC guidance for childminders

You can claim the actual cost of food and drink provided to the children you care for. If food is shared with your own household, you can claim a reasonable proportion of the total cost.

Source: HMRC guidance for childminders

You can continue to claim the estimated cost of food and drink provided to the children you care for.

Source: HMRC guidance for childminders

You'll need to keep digital records of your income and expenses following MTD rules. Every expense you log in the tiney app counts as a digital record.

Source: HMRC: keeping records under MTD

You can continue to use a cashbook and attendance register. You need to keep receipts for:

You do not need receipts for:

Source: HMRC guidance for childminders

HMRC says many childminders don't claim everything they could. Think about:

If it's genuinely for your childminding business, you can likely claim it. When in doubt, call the Morton Michel Tax Advice line.

Source: HMRC childminder expenses guidance (BIM52751)

Under MTD, you'll need digital records of all your expenses.

Get into the habit now:

What if you don't have a receipt?

It happens. If you're missing one, make a note straight away: what you bought, how much, where, when, and why it was for childminding. Keep any other supporting evidence such as bank statements or order confirmations.

A bank statement shows you made a payment, but it doesn't prove what it was for. Your notes matter.

We're building tools directly into the tiney app to make this as straightforward as possible.

The quickest way to stay on top of your records is to log expenses as you go. Open the tiney app, tap to add an expense, and take a photo of your receipt. Our AI reads it automatically, pulling out the amount, date, supplier, and suggested category, so you just check the details and confirm.

It works for paper receipts and digital ones too. Got an email confirmation or an online invoice? Take a screenshot and upload it the same way.

Every expense you log this way is a digital record. That means you're already building your MTD-compliant records without any extra admin.

Read the help article on how to log expenses here.

When you opt in to MTD through the app, we'll help you work out your percentages. We'll ask about your home and your hours, calculate your defaults for each expense category, and apply them automatically.

You'll be able to review and override any of these at any point.

When you add an expense, we'll ask whether it was fully for your business or partly personal. If partly personal, tell us the proportion and we'll calculate the right amount to claim.

If you've set up your category defaults, we'll pre-fill the proportion for you automatically. For most expenses, you won't need to do anything extra.

You'll be able to download a CSV of all your income and expense data from wallet settings. Useful if you're working with an accountant or using your own software alongside tiney.

Note: If you're not impacted by MTD yet, you'll still be able to get your usual tax summary from us.

We're building the ability to submit your quarterly updates and end-of-year declaration directly to HMRC through tiney. We'll connect securely to your HMRC account, pre-fill what we already know, and walk you through each submission.

Note: Direct HMRC submission is subject to sign-off from HMRC. We'll let you know as soon as it's available.

Your tiney membership includes access to the Morton Michel Tax Advice line. Call them on 0330 058 9861 for questions about your specific situation.

You can also get 20% off self-assessments with Taxfix at taxfix.com/en-uk/tiney.