The Averaging calculator helps you to calculate the averaging required for farmers, market gardeners, and creators of literary or artistic works. Refer to HMRC's guidance in Check reliefs and rules for farmers and market gardeners (opens in a new tab) or Averaging for creators of literary or artistic works.
The calculator uses the averaging rules to determine the method of averaging that can be used. If the lowest of the Profit entries is 75% or more of the highest entry, then averaging is not applicable for the current year and the calculator shows no adjustment can be made.
If it is less than 75% of the higher profit, then averaging is available and the calculator shows the averaging method used and the subsequent adjustments to the current year and prior years' profits.
IRIS Elements Tax Professional subscribers average over two years only.
IRIS Elements Tax Enterprise subscribers can choose whether to average over two or five years.
- From the Self employment section or Partnership section, scroll down to the Adjustments sub-section.
- Next to Averaging adjustment, select Calc.
The calculator displays an error message if the business has started in the last two years or has ceased in the current year, as averaging is not applicable in these circumstances.
- IRIS Elements Tax Enterprise subscribers only. Choose whether the averaging period is 2 Years or 5 Years.
- If this is the first year that data has been entered, or if the previous year’s profit shown is incorrect, select Override and enter the previous year’s adjusted profit into the first field of the averaging calculator.
If the previous year was already subject to an averaging claim, then the figure to use is the averaged profit from the previous year.
- If this tax return's data is based on last year's data, the averaging calculation is made automatically. To accept the adjustment for the current year profit, select Accept.
The calculator only updates the self-employment profits for the current year. To make the adjustment for the previous year, work out how much the tax and Class 4 NICs for the previous year would have changed if you had amended that tax return to the averaged profits, then use the underpayments, overpayments and adjustments section to enter the increase or decrease in tax due for the earlier year.