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HMRC internal manual

Business Income Manual

Averaging: who can claim

S221 Income Tax (Trading and Other Income) Act 2005

An individual may use averaging for profits earned from a qualifying trade, profession or vocation carried on alone or in partnership.

A trade, profession or vocation qualifies if:

  • it is farming or market gardening in the UK (see BIM84055)
  • it is the intensive rearing in the UK of livestock or fish on a commercial basis for the production of food for human consumption
  • the taxpayer’s profits from it are derived wholly or mainly from creative works (see BIM84060).

Companies, including corporate partners, may not claim averaging nor may any other body which is chargeable to Corporation Tax.

Unincorporated businesses using the cash basis may not claim averaging.