Pillar Guide · Updated July 2026
Tax for Childminders and Nannies: A Complete UK Guide for 2026/27
Childcare providers can be taxed in very different ways depending on whether they are self-employed (most childminders) or employed directly by a family (most nannies). This guide explains how self-employed childminders account for tax and allowable expenses, and the employer obligations a family takes on when they hire a nanny, including PAYE and National Insurance.
Why Most Childminders Are Self-Employed
Registered childminders typically run their own independent business from their own home, caring for children from multiple different families under contracts they set themselves, which means they are almost always treated as self-employed for tax purposes, responsible for registering with HMRC, filing a Self Assessment return, and paying their own Income Tax and National Insurance.
Childminder Income and Allowable Expenses
A self-employed childminder declares all fees received from parents as business income, and can deduct allowable business expenses before calculating taxable profit, including a proportion of household bills relating to the part of the home used for childminding, food and activities provided to minded children, toys and equipment, and training costs, using a fair and reasonable basis to apportion shared household costs between business and personal use.
Simplified Expenses for Childminders
HMRC publishes specific simplified expenses guidance for childminders, allowing a set percentage of relevant household running costs (such as heating, water, council tax and mortgage interest or rent) to be claimed as a business expense based on the number of hours the home is used for childminding, without needing to calculate exact apportionment from scratch, which many childminders find considerably simpler than detailed record-keeping.
Registration and Regulation
Alongside registering as self-employed with HMRC, childminders in England must register with Ofsted (or the equivalent regulator in Scotland, Wales or Northern Ireland) to legally provide childcare, and many also join a professional childminding agency or association, though the regulatory registration is separate from, and in addition to, the tax registration required for Self Assessment.
Why Most Nannies Are Employees
A nanny who works in a single family's own home, under that family's direction, using the family's own equipment and following the family's routines, is almost always an employee of that family for tax and employment law purposes, even if they are only hired for a few hours a week, rather than being self-employed in the way a childminder typically is.
The Household Employer Duties
Hiring a nanny makes the family a household employer, with legal responsibilities including registering as an employer with HMRC, operating PAYE to deduct Income Tax and employee National Insurance from the nanny's pay, paying employer National Insurance on their behalf, providing payslips, and assessing and potentially operating workplace pension auto-enrolment duties, in broadly the same way as any other employer.
Setting Up Nanny Payroll
Many families use a specialist nanny payroll service to handle the calculations and HMRC submissions, since running PAYE correctly requires registering as an employer, submitting Real Time Information reports each payday, and correctly applying tax codes and student loan or other deductions where relevant, which can be complex for a family managing it without prior payroll experience.
Help Paying for Childcare
Families employing a registered nanny, or using a registered childminder, may be able to use Tax-Free Childcare or the childcare element of Universal Credit to help with the cost, provided the childcare provider is properly registered with the relevant regulator, since unregistered childcare arrangements do not qualify for this government support.