Times have been particularly tough for the theatre and live arts sector over the last 12 months, and particularly so for those organisations who already relied on a combination of public funding and ticket sales to keep them afloat. With the theatre sector hoping for a return to normal by the Autumn, companies will be looking for ways to save money, and fortunately there is already a government scheme that can help them to do so.
Theatre Tax Relief is one of the Creative Industry tax reliefs – a group of 8 Corporation Tax reliefs that allow qualifying companies to increase their amount of allowable expenditure. This can reduce the amount of Corporation Tax the company needs to pay, or in the case of a loss, may allow them to convert some or all of this loss into a payable tax credit.
Theatre Tax Relief
Your company can claim Theatre Tax Relief if:
- it puts on one of the following qualifying theatrical productions:
- a play, opera, musical or other dramatic piece, where the performances are live and the performers give their performances wholly or mainly through the playing of roles
- a ballet
- all, or a high proportion, of the performances, will be to paying members of the general public or provided for educational purposes
- at least 25% of core expenditure is on goods or services provided from within the European Economic Area (EEA)
There are some interesting exceptions listed against this type of tax relief alongside the more standard conditions seen in the other forms of Creative Industry Tax Relief, which prohibit claims for products whose purpose is advertising or promotion, or where there is an element of competition. You cannot claim theatre tax relief if your theatre production uses a wild animal in any performance, or is of a sexual nature! You also cannot claim if one of the main objects of your production is to make a recording.
In order to claim, your company mut be actively engaged in planning & decision making, including directly negotiating, contracting, and paying for rights, goods and services.
If you qualify, you can claim 80% of core expenditure, or the total amount of EEA core expenditure, against your Corporation Tax, whichever is the lower amount. Core expenditure is expenditure on producing and closing the theatrical production. If you make a loss, some or all of this loss can be surrendered for a payable tax credit at a rate of 20%, or 25% if your production is touring. To qualify as ‘touring’ you must have intended to have performances at 6 or more separate premises, or there must be at least 14 performances in at least 2 separate premises.
You can make your claim on your company tax return and may make, amend or withdraw a claim up to one year after the company’s filing date.