Income Tax (Trading and Other Income) Act 2005 section 55

Averaging profits of farmers and creative artists

Section 55 is a transitional provision that establishes when the profit averaging rules for farmers and creative artists first apply and preserves the right of farming partners to make averaging claims for the changeover years.

• The earliest tax years eligible for a profit averaging claim under the new rules are 2004-05 and 2005-06.
• Individuals carrying on a farming or market gardening trade in partnership in the United Kingdom are given a specific transitional protection.
• If such a partner could have claimed profit averaging under the old rules (section 96 of ICTA 1988, now repealed), they may still make a claim for the 2004-05 and 2005-06 tax years under the new provisions.
• This transitional right applies regardless of any other restrictions in the new averaging rules that might otherwise prevent the claim.