Annex 1: Minor changes in the law made by the Act: Change 58: Averaging: foreign trades: section 221
This change allows an individual to claim averaging of profits derived from creative work carried on wholly abroad. Section 65(3) of ICTA may in fact allow a claim but the section removes any doubt.
Schedule 4A to ICTA applies to profits derived from creative works that are “chargeable to tax under Case I or II of Schedule D”. The policy is to exclude profits that are charged under Schedule D Case VI because they arise from activities that do not amount to a trade, profession or vocation.
It will be rare for a UK resident individual to carry on a “creative” trade wholly outside the United Kingdom. But there is no reason why the profits of such a trade should not be averaged. And it would complicate the Act to make an exception for a foreign trade.
This change is in taxpayers' favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.