BIM84115 - Averaging: which years may be averaged

S222 and S222A Income Tax (Trading and Other Income) Act 2005

An averaging claim can cover any two consecutive tax years during which the claimant was carrying on any qualifying trade, profession or vocation.

From 2016/2017 a qualifying trade, profession or vocation other than one where the profits are derived wholly or mainly from creative works can, as an alternative to two year averaging, claim to average over five consecutive tax years.

With both two and five year averaging, claims cannot be made in the tax year in which the trade commenced or ceased. For example, a claim could not be made by a partner for the year they join the partnership.