Income Tax (Trading and Other Income) Act 2005

222 Circumstances in which claim may be made

(1) An averaging claim may be made in relation to two consecutive tax years in which a taxpayer is or has been carrying on the qualifying trade, profession or vocation if—

(a) the relevant profits of one of the tax years are less than 75% of the relevant profits of the other tax year, or

(b) the relevant profits of one (but not both) of the tax years are nil.

(2) An averaging claim may be made in relation to a tax year which was the later year on a previous averaging claim.

(3) An averaging claim may not be made in relation to a tax year if an averaging claim has already been made in relation to a later tax year in respect of the trade, profession or vocation.

(4) An averaging claim may not be made in relation to the tax year in which—

(a) the taxpayer starts, or permanently ceases, to carry on the trade, profession or vocation, or

(b) in the case of a trade, profession or vocation within section 221(2)(c), it begins or ceases to be a qualifying trade, profession or vocation.

(5) An averaging claim must be made on or before the first anniversary of the normal self-assessment filing date for the second of the tax years to which the claim relates.

(6) But see section 225(4) (extended time limit if profits adjusted for some other reason).