Part 2Trading income
Chapter 16Averaging profits of farmers and creative artists
221Claim for averaging of fluctuating profits
1
This Chapter enables an individual (a “taxpayer”) to make a claim (an “averaging claim”) if—
a
the taxpayer is, or has been, carrying on a qualifying trade, profession or vocation (alone or in partnership), and
b
the taxpayer's profits from it (“the relevant profits”) fluctuate from one tax year to the next.
2
F3For the purposes of section 222 (two-year averaging) a trade, profession or vocation is a “qualifying trade, profession or vocation” if—
a
it is farming or market gardening in the United Kingdom,
b
it is the intensive rearing in the United Kingdom of livestock or fish on a commercial basis for the production of food for human consumption, or
c
the taxpayer's profits from it are derived wholly or mainly from creative works.
F22A
For the purposes of section 222A (five-year averaging), a trade, profession or vocation is a “qualifying trade, profession or vocation” if it falls within subsection (2)(a) or (b).
3
For F4the purpose of subsection (2) “creative works” means—
a
literary, dramatic, musical or artistic works, or
b
designs,
created by the taxpayer personally or, if the qualifying trade, profession or vocation is carried on in partnership, by one or more of the partners personally.
4
For the purposes of this Chapter references to the relevant profits of a tax year are to profits before making any deduction for a loss made in any tax year.
5
If the taxpayer makes a loss in the qualifying trade, profession or vocation in a tax year, the relevant profits of the tax year for the purposes of this Chapter are nil.
F16
For the purposes of this Chapter references to the relevant profits of a tax year are to profits after any adjustment made under Chapter 16ZA (compensation for compulsory slaughter of animals).