Started a new business? When MTD applies to you
New businesses get extra time. You're mandated into MTD from the start of the third tax year, counting the year your qualifying income first exceeds the threshold as the first, not from the year you started trading, giving a new business room to establish itself first.
A worked example
Say a new sole trade's income first exceeds the threshold, currently £20,000 for years this far ahead though a Budget could still change it, in 2027/28. That's year one. 2028/29 is year two. 2029/30, starting 6 April 2029, is year three, when MTD begins. The count starts from the year you first exceed the threshold, however many quiet years came before it.
Common questions
Does the clock start from when I started trading, or from when I first exceed the threshold?
From when your income first exceeds the threshold, not from your trading start date. A slow first year or two before you cross the threshold does not shorten your runway.
What if I do not tell HMRC promptly that I have started trading?
The third-tax-year rule assumes you notify HMRC in good time. Late notification of self-employment or property income can affect your position, so register promptly.
Does this apply to a new rental property business too?
Yes. The same rule applies whether your new income is from self-employment or from letting property.
How do I find my exact date?
The Start Date Checker works out your specific date once you enter your trading start and income figures, rather than relying on a general example.