Income Tax (Trading and Other Income) Act 2005 section 222

Circumstances in which claim for two-year averaging may be made

Section 222 sets out the conditions under which a farmer or creative artist carrying on a qualifying trade, profession or vocation may make a claim to average their profits over two consecutive tax years.

• A two-year averaging claim can be made where the profits of one year are less than 75% of the other year's profits, or where one year's profits are nil and the other year's are not
• A claim cannot be made for a tax year if an averaging claim (whether two-year or five-year) has already been made for a later tax year in respect of the same trade, profession or vocation
• The year in which the taxpayer starts or permanently ceases the qualifying activity, or the year in which the activity begins or ceases to qualify, is excluded from any averaging claim
• The claim must be submitted no later than one year after the normal self-assessment filing date for the second of the two tax years covered by the claim