The changes are due to come into effect from April
More than 2,000 families could be impacted by a reduction in the availability of childminders as a result of changes to how the profession is taxed, the head of the Northern Ireland Childminders Association has warned.
Patricia Lewsley Mooney was speaking to Belfast Live after she met with HMRC to raise the concerns of their members regarding changes to the ‘wear and tear’ tax discount as a result of the Government’s introduction of the Making Tax Digital system, which is due to be rolled out from April.
Under the current system, childminders can claim a 10 per cent discount on their tax bill to account for ‘wear and tear’ on their homes caused by operating their businesses.
HMRC have said that those using the new MTD system will be able to see an in-year estimate of how much tax they owe, understand their cash flow better, make more informed financial decisions for their business and reduce the risk of under or overpaying tax and that claiming actual costs may be more beneficial than the flat-rate deduction, ensuring that expenses accurately reflect the valuable work childminders do.
Childminders with a qualifying income of over £50,000 are required to use MTD from April 2026. These childminders, HMRC have said that, like any other business, they can continue to get full tax relief on the business proportion of their expenses when they join MTD, meaning their actual expenses will need to be recorded and deducted.
“Very few childminders in Northern Ireland will be affected this year, because in 26/27 it is anybody earning over £50,000.. Then, from 27/28, it will be £30,000, and by 28/29, it will be anyone earning over £20,000 moving onto the new system. So, while we have had one enquiry from a childminder who earns more than £50,000, it will be next year before we properly start to see the impact,” Patricia said.
“There hasn’t been a good enough lead-in time or understanding of what the process is like.
“We’ve done a UK-wide survey that tells us that 68 per cent of our childminders are still paper-based, so it’s going onto that Making Tax Digital and the cost of that, because many of them won’t have laptops or scanners and some of them don’t even have phones.”
HMRC said that childminders do not currently get a separate allowance from HMRC, and that administrative changes for childminders were announced at the Budget to record keeping and the way some expenses are calculated for childminders in MTD.
They also said that they are aware that childminders are uncertain about how these changes may affect them and may have seen misleading information online. They confirmed that they are supporting customers with a suite of guidance products, direct communications, webinars, live events and social media activity to help them to prepare. and are using targeted paid-for advertising and making direct contact with MTD customers by writing to them to explain the changes and how to prepare.
“Just after Christmas, we were told that the changes were coming in and that they were taking away the 10 per cent ‘wear and tear’ tax discount on childminders without any consultation,” Patricia said.
Patricia Lewsley Mooney refuted the claim by HMRC that childminders will still be able to claim for wear and tear under the new system.
“The only people that will be able to continue are those that are on the different income levels,” she said. “So anybody earning under £50,000 this year can still claim it next January, and those under £30,000 can claim it the following January. That means that anybody earning under 20,000 who will not be in the Making Tax Digital bracket will still be able to continue to claim the 10 per cent.
“My worry is that the majority of our childminders who are maybe earning 20 to £25,000 will decide to lower their capacity and go in under the threshold of £20,000 to be able to claim the 10 per cent wear and tear discount.
“That will put huge strain on a sector which is already straining at the sides with regard to capacity.”
Patricia said that this could have a detrimental impact on the availability of childcare places in Northern Ireland.
“We’ve done our own survey of 833 childminders, asking them how many families they work with. So, if we are saying that half of those decide to leave the sector, which the original survey said, then you’re talking about 2,034 families that would be affected.”
Lagan Valley MLA and member of Stormont’s Education Committee, Michelle Guy, said that the move was “alarming”.
“Childminders provide a vital source of childcare for parents in Northern Ireland. This is a sector that’s already under a lot of pressure, and everybody knows there is a childcare crisis. So to introduce a change that would have an impact on childminders to the extent that a number will decide that they can’t afford to be a childminder anymore, it’s something I’m very, very concerned about.
“I’m also concerned about how this has been rolled out. They have not engaged at all with our local childminding associations, and they haven’t done any proper impact assessment.
“This seems to have been done v ery quickly on the back of an envelope one day and issued in a statement in December, and that’s not good enough, there’s a real threat in terms of our economy here too with the need for childcare, if you start removing, and losing childminders from the the sector, then that’s going to have an impact on parents and their ability to go to work.
“This may especially impact some parents with kids with special educational needs because the flexibility a nd the type of care they get in a childminding setting will suit a lot of those families a lot better. I’m not sure that the reward they think they’re going to get from it will be worth it, so I just want the HMRC to really meaningfully engage, understand the impact of what they’re doing, and at the very least pause this move right now until we can have more conversations.”
Michelle Guy also expressed concern about the impact this could have on families in rural communities where access to childminders may be limited and called on the Finance and Education Ministers to work together to lobby on behalf of childminders in Northern Ireland.
An HMRC spokesperson said: “All childminders will still be able to claim for the same categories of expenses as they currently do, including wear and tear. Those in MTD may also be able to claim more than they currently do.”
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