My client is an author and generally liable to higher rate tax and the child benefit charge. For 2020/21, his income was much lower than usual. Averaging could apply and would reduce his overall tax and NIC for 2019/20 and 2020/21. Using the averaged profit for 2019/20 would also reduce the Child Benefit charge. But can you reduce the CB charge in the same way that you can reduce tax and NIC? I can't find anything on this topic.
There is another difficulty. As business was so bad in 20/21, he applied for a fellowship that pays him for helping students with their writing. This forms almost 35% of his turnover. I note that averaging only applies to creative income. Should I take the element relating to the fellowship out and show it as a second self-employment? This would reduce the creative profits for 2020/21 and the averaged profit.
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