theatre tax relief

What Is Tax Relief and How Can It Benefit My Theatre?

The UK’s creative industries companies faced unprecedented financial difficulties due to the Coronavirus Pandemic, with ticket sales at UK theatres falling by 93% due to the pandemic, in 2020. In response to this, Theatre Tax Relief is just one of the Creative Industries Tax Reliefs that have had their rates doubled until 2023, this was announced in the Government’s Autumn 2021 Budget, giving new hope to the Creative Industries to see them out of the Pandemic. 

The UK is well known for it’s proud heritage, producing some of the biggest world-acclaimed creative material, which is why these tax reliefs are so important. The UK is home to over 1,100 active theatres, both modern and classic from the West End in London, to others dotted across England, Scotland, Wales. Some of the most well-known theatres in the UK known worldwide are The London Palladium (The UK’s largest theatre, with a capacity of 2286 seats), National Theatre, London, The Royal Exchange Theatre, Manchester and The Festival Theatre Edinburgh.

Understanding the benefits of TTR (Theatre Tax Relief) is integral for all theatrical production companies across the UK, it gives companies the chance to lower pre-production costs as long as they are producing qualifying productions, and fit the criteria for the scheme. 

What is Theatre Tax Relief (TTR)?

You may be wondering in regards to theatrical production companies, what is tax relief? And how can it actually benefit me? Theatre Tax Relief is a government incentive that financially assists companies that are producing dramatic productions/ballets for live performance. The scheme was introduced in 2014, being added to the group of Creative Industries Tax Reliefs. It was introduced to encourage and support theatrical companies within the UK’s Theatrical Industry to boost employment within the sector and innovation. 

A company will be eligible to reduce pre-performance costs by 20-25%, with the scheme aiming to offer financial support to companies that qualify. A very unique aspect of the scheme is that some businesses that already claim Corporation Tax exemptions can still be eligible for it, which is not common in the world of Government Tax Incentives, such as the R&D Tax Credits scheme.

How Can I Qualify For Theatre Tax Relief (TTR)?

In order to qualify for Theatre Tax Relief, there are certain criteria that need to be met for a company to be considered. The criteria is:

  1. The company must be actively engaged in the planning and decision making of theatrical productions for live performance, to paying members of the general public or for educational purposes.
  2. The company must also directly negotiate, contract and pay for rights, goods and services.
  3. It also must be responsible for putting the production on from the beginning to end, including employing and engaging the performers.
  4. The company can be constituted as a limited by shares, limited by guarantee, Charitable Incorporated Organization, Community Interest Company or a Scottish Charitable Incorporated Organization. 
  5. It must also fall under the Company Tax Regime, even if a business doesn’t file for Company Tax Returns, they will still be able to claim. 

In terms of what would make a company NOT eligible, if a company’s main purpose is advertising, or promoting goods and services, the performance consists or even includes competitions/contests, uses wild, the productions are of a sexual nature, the productions main objective is to make a relevant recording, or if the production has been produced for training purposes only then it will not be eligible.

What makes my performance qualify for Theatre Tax Relief?

When it comes to determining whether your Theatre Tax Relief (TTR) production itself will qualify, it will also need to follow a criteria, which is:

  1. The performance has to be a play, opera, musical, ballet or any live dramatic piece where the performers fully or partially play roles and tell a story.
  2. Most or all of the performances will be required to be played to the public, or for educational purposes.
  3. At least 25% of the core expenditure incurred on goods and services provided from within the UK or the European Economic Area (EEA). 
  4. The production itself meets the commercial purpose condition.

How much Theatre Tax Relief can I claim?

The amount of Theatre Tax Relief (TTR) that you will be able to claim will depend on the expenses incurred on the production. The current rate has been more than doubled from the previous 20% rate for Non-Touring productions to 45%, and from 25% for Touring productions to 50%, this has been effective from the 27th of October 2021 til the 31st of March 2023. 

The scheme works by allowing theatrical companies to claim an additional deduction to reduce their profits, or to increase a loss which will therefore reduce the amount of Corporation Tax that needs to be paid. If your company is loss-making, all or some of this can be surrendered for a payable tax credit, the rate for this is 20% for surrendering losses, but you will be able to surrender losses at an increased rate of 25% if the production is touring. To be considered as a touring production, you must fit the criteria which is:

  1. You must intent to have performances at 6 or more separate premises at the start of the production
  2. There must also be at least 14 performances of which are in at least 2 separate premises. 

What core costs are eligible for Theatre Tax Relief?

The core costs that your theatrical production company will be able to claim for are costs that are directly from the making of the production, this means that marketing, distribution, financing, initial concept work and ordinary running costs of the production will NOT be eligible to be claimed for.

Do I need to pass the BFI Cultural Test?

No, you will only need to provide the BFI Cultural Test certification if you are claiming under the Film Tax Relief (FTR), High-End Television Tax Relief (HTR), Animation Tax Relief (ATR), Children’s Television Tax Relief and Video Games Tax Relief (VTR) schemes.

How Can I Claim Theatre Tax Relief?

To claim TTR, you can do this on your Company Tax Return by calculating the amount of your additional deduction that is due to your company, and also any payable credit due. You will be required to provide evidence to support your claim to easily assist HMRC to assess your claim quickly and efficiently. 

You can provide this evidence by sending it with your Company Tax Return, or by completing the form given by HMRC to provide supporting evidence for the claim. Before you complete the form, you must claim through your Company Tax Return, and within the form you must provide the following details:

  1. Title of production
  2. A document that relays the tax calculations, which include deductions and credit.
  3. The company’s total core expenditure
  4. A detailed breakdown of the core costs and non-core costs between UK and European Economic Area (EEA) countries, and countries that are outside of the UK and EEA.
  5. The company’s qualifying expenditures broken down by catergories
  6. The date of the start of production phase
  7. The opening night of the production
  8. If the claim is a touring production, then you will need to provide the number of performances at each premises, and also the date of each performance.

To find out more about the details that need to be provided, click here.

You can make, amend or withdraw a Theatre Tax Relief (TTR) claim for up to one year after the company’s filing date, HMRC may also agree to accept late claims in some circumstances, but this is not recommended. It is always optimal to use a Creative Industries Tax Relief specialist such as Green Jellyfish, who are highly experienced with dealing with HMRC, compiling reports and ensuring compliance. To learn more about how we can help you, click here.

What other Creative Industries Tax Reliefs are available?

If your company is within a different sector or the Creative Arts, and you are wondering whether there is tax relief available for you, there are 7 different Tax Incentives, which are:

  • Animation Tax Relief (ATR)
  • Children’s TV Tax Relief
  • Film Tax Relief (FTR)
  • High-End TV Tax Relief (HTR)
  • Museum & Gallery Industry Tax Relief
  • Orchestra Tax Relief
  • Video Games Tax Relief (VGTR)

To find out more about Theatre Tax Relief, or any of the Creative Industries Tax Relief incentives, click here.

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