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Starting a domiciliary care agency: the financial setup done right.

Starting a domiciliary care agency involves two sets of paperwork: the compliance documents CQC consultants help with, and the financial documents that accountants build. We own the second set. <a href="https://www.cqc.org.uk/guidance-providers/registration">CQC registration is mandatory before you provide any regulated activity</a>, and the application includes a <a href="https://www.cqc.org.uk/guidance-regulation/providers/registration/supporting-documents-provider/document/financial-viability-template">financial viability statement on CQC's own template</a>, which we prepare. Alongside it, we set up the right legal structure, build financial projections that reflect the real wage bill (including <a href="https://www.gov.uk/guidance/calculating-the-minimum-wage/working-hours-for-which-the-minimum-wage-must-be-paid">inter-call travel time as paid working time</a> and <a href="https://www.gov.uk/national-minimum-wage-rates">NLW at £12.71 from 1 April 2026</a>), establish the VAT position from day one and stand up payroll correctly before you take on your first client. The financial foundation and the CQC financial paperwork go up together, not one after the other.

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Pre-registration
<a href="https://www.cqc.org.uk/guidance-providers/registration">CQC registration is mandatory before providing regulated activities</a>; new providers must submit a <a href="https://www.cqc.org.uk/guidance-regulation/providers/registration/supporting-documents-provider/document/financial-viability-template">financial viability statement on CQC's template</a> as part of the application
VAT-exempt
Welfare supplies are <a href="https://www.gov.uk/guidance/welfare-services-and-goods-notice-7012">VAT-exempt from CQC registration</a>, so input VAT is irrecoverable from day one; <a href="https://www.gov.uk/vat-registration/when-to-register">VAT registration only bites once taxable turnover exceeds £90,000</a>
£12.71
<a href="https://www.gov.uk/national-minimum-wage-rates">NLW from 1 April 2026</a> for workers aged 21 and over; the dominant cost line before <a href="https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2025-to-2026">employer NIC at 15% above £5,000</a> and paid inter-call travel time

The challenges clients face.

Projections that ignore inter-call travel time and understate the real wage bill

<a href="https://www.gov.uk/guidance/calculating-the-minimum-wage/working-hours-for-which-the-minimum-wage-must-be-paid">Travel between client visits is working time for NMW purposes</a> and must be paid at or above the applicable rate. A projection built on contact-time hours only understates the wage bill by the travel burden across all carers. For a new agency this error can make the business look viable when the real hourly economics do not work.

Leaving the CQC financial viability statement to the last minute

The <a href="https://www.cqc.org.uk/guidance-regulation/providers/registration/supporting-documents-provider/document/financial-viability-template">financial viability statement</a> is a gating document in the CQC application, not a final step. Building it requires the same financial projections that underpin the business; doing them once, for both purposes, avoids two rounds of work and ensures the numbers you give CQC match the numbers you run the business on.

Assuming VAT registration or recovery when supplies are exempt

A domiciliary care agency providing regulated personal care is a <a href="https://www.gov.uk/guidance/welfare-services-and-goods-notice-7012">VAT-exempt supplier from the date CQC registration is approved</a>. This means the business does not charge VAT on care fees and cannot recover VAT on purchases. Founders who assume they will register for VAT and reclaim input VAT on set-up costs, vehicles or equipment need to understand this position before they spend.

An owner-manager pay structure not modelled from the start

Owner-directors of a limited company typically draw a salary to the personal allowance and take the remainder as dividends. <a href="https://www.gov.uk/tax-on-dividends">Dividend tax rates from 6 April 2026 are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate)</a> above the £500 annual dividend allowance. If you trade personally as a sole trader and your income exceeds £50,000, <a href="https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax">Making Tax Digital for Income Tax applies from 6 April 2026</a>. Both scenarios need modelling before you choose a structure.

How we help.

Set up the right structure and opening accounts, MTD-IT ready if you trade personally

We advise on limited company versus sole trader based on your income level, risk appetite and growth plans. If you incorporate, we set up the opening accounts and establish the owner-director pay structure. If you trade personally, we confirm whether <a href="https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax">MTD-IT applies</a> from the outset and set up compatible record-keeping before HMRC requires it.

Build projections and the CQC financial viability statement together

We build the financial projections with the real cost base (NLW, inter-call travel time, employer NIC per head, irrecoverable VAT) and use the same model to prepare the <a href="https://www.cqc.org.uk/guidance-regulation/providers/registration/supporting-documents-provider/document/financial-viability-template">CQC financial viability statement</a>. One set of numbers, two outputs: the statement CQC requires and the projections your bank or investor expects. See also our dedicated <a href="/services/cqc-financial-viability-statement">CQC financial viability statement service</a>.

Stand up payroll, VAT and sponsored-staff cost base before you take on your first client

We set up payroll to handle irregular-hours holiday accrual at <a href="https://www.gov.uk/holiday-entitlement-rights">12.07%</a>, inter-call travel time and <a href="https://www.gov.uk/guidance/calculating-the-minimum-wage/working-hours-for-which-the-minimum-wage-must-be-paid">sleep-in NMW correctly</a>. If you plan to sponsor overseas carers through the <a href="https://www.gov.uk/health-care-worker-visa/eligibility">Health and Care Worker visa</a>, we build the <a href="https://www.gov.uk/uk-visa-sponsorship-employers">sponsor licence</a> obligations and immigration skills charge into your per-head cost model from the start.

Common questions

What financial paperwork does CQC need to register a domiciliary care agency?
The CQC registration application for a new provider includes a requirement to submit a <a href="https://www.cqc.org.uk/guidance-regulation/providers/registration/supporting-documents-provider/document/financial-viability-template">financial viability statement on CQC's own template</a>. This sets out projected cash flows, funding sources and opening capital to demonstrate that the business is financially capable of delivering regulated care. <a href="https://www.cqc.org.uk/guidance-providers/registration">Trading before CQC registration is a criminal offence</a> under the Health and Social Care Act 2008, so the application must be completed before you take on your first client.
Do I need an accountant to start a domiciliary care agency?
Not legally, but the financial requirements make professional input worthwhile at the start rather than retrospectively. The CQC financial viability statement is normally prepared or signed by an accountant. Beyond that, the NMW compliance position on inter-call travel time, the employer NIC modelling per head and the VAT position from day one all require judgments that are easier (and cheaper) to get right at setup than to fix after HMRC or CQC has asked the question.
Should I set up as a sole trader or a limited company?
Both are viable. A limited company separates personal and business liability and allows the owner-director pay structure (salary plus dividends), with <a href="https://www.gov.uk/tax-on-dividends">dividend tax at 10.75% (basic), 35.75% (higher) or 39.35% (additional) above the £500 allowance from 6 April 2026</a>. A sole trader is simpler to set up but personal liability is unlimited, and if income exceeds £50,000 from 6 April 2026, <a href="https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax">Making Tax Digital for Income Tax applies</a>. The right answer depends on projected income, growth plans and risk appetite.
Do I need to register for VAT to run a care agency?
Only if your taxable turnover exceeds <a href="https://www.gov.uk/vat-registration/when-to-register">£90,000 in the rolling 12-month period</a>. The regulated personal care services you provide as a CQC-registered domiciliary agency are <a href="https://www.gov.uk/guidance/welfare-services-and-goods-notice-7012">VAT-exempt welfare supplies</a>, which do not count toward the threshold. A care-only agency can have significant turnover with zero taxable supplies and no registration obligation. If you offer any non-exempt services alongside care, those supplies must be monitored separately.
What will my staff really cost once I add travel time and employer NIC?
At <a href="https://www.gov.uk/national-minimum-wage-rates">£12.71 NLW from 1 April 2026</a>, employer NIC at <a href="https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2025-to-2026">15% above the £5,000 secondary threshold</a>, <a href="https://www.gov.uk/holiday-entitlement-rights">holiday accrual at 12.07%</a> of hours worked and inter-call travel time paid at the NLW rate, the true cost per care hour is materially above the headline wage rate. <a href="/calculators/true-cost-care-hour-calculator">Use our true cost of a care hour calculator</a> to model the full per-hour cost against your proposed fee rate before you take on your first contract.
Does Making Tax Digital apply to me as a care-agency owner?
If you operate as a sole trader and your combined self-employment and property income exceeds £50,000, <a href="https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax">MTD for Income Tax applies from 6 April 2026</a>. The threshold drops to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. MTD requires quarterly updates to HMRC using compatible software. If you incorporate, the company files corporation tax returns under standard CT rules and MTD-IT does not apply to the company itself.

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