Orchestra Tax Relief

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If you’ve found your way to TaxBite, you’re probably interested in claiming Orchestra Tax Relief. Or maybe you’re looking to learn more about it. Find out below the current eligibility criteria, available tax credit, and how to qualify for Orchestra Tax Relief.

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What is Orchestra Tax Relief (OTR)?

Instrumental groups around the UK are claiming Orchestra Tax Relief on their performances. OTR is a government incentive for certain musicians in the creative industry to receive a payment from HMRC that equates to a percentage of production spend. The main aim is to encourage instrumental groups to create orchestral concerts. 

Despite its name, Orchestra Tax Relief applies to many various types of musical groups. That said, musicians shouldn’t be put off applying for Orchestra Tax Relief if they do not class themselves as a traditional orchestra. It’s based on eligible Orchestral performances. The definition of an orchestral performance is that only a small number of the instruments involved can be electronically or directly amplified.

What’s even more interesting about OTR is that an instrumental group doesn’t have to be a Corporation Taxpayer to claim it. Groups claiming OTR with their tax return have received an average payment of around 14% of production costs on an annual basis. 

Production costs are classed as any costs incurred by performances, venue hire for rehearsals and performances, directors fees, and music hire.

TaxBite chartered accountants are on hand to claim OTR on your behalf to simplify the process. Talk with us today!

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How much Orchestra Tax Relief can I claim?

Orchestra Production Companies can claim either 80% of the total core expenditure or the actual incurred EAA core expenditure – whichever is lower. 

OTR is worth up to 20% of OPC’s core production costs. Therefore, if the OPC is profitable in a single concert, OPCs can use the Orchestra Tax Relief to reduce their Corporation Tax finance bill on taxable profits. 

Companies can claim an additional deduction in computing the taxable profits. For tax reasons, the additional deduction increases the level of expenditure. If the OPC makes a loss, OPCs will be able to claim a cash payment at a rate of 25% from HMRC.

OPCs should note that when making an election, each individual concert must be treated as a separate trade, so the profits and losses must be recorded and calculated separately.

Qualifying Expenditure

For OPCs to qualify for OTR, they must spend their costs in many specific areas. Therefore, we’ve consolidated the qualifying expenditure in a handy list below:

Contrary to other creative industry tax relief incentives, OPCs do not need to pass the cultural test for Orchestral Tax Relief.

Expenditure That Does Not Qualify

A few company costs do not qualify for creative industry tax reliefs. For example, you cannot claim on expenditure related to the actual performance, non-producing activities, or expenditure that has already been claimed for in a separate creative industry tax relief such as Theatre Tax Relief or R&D Tax Credits. 

OPCs should note that their accounting, admin, advertising, legal services, and marketing costs do not qualify for the tax credit. In addition, if your production company makes a high proportion of their expenses abroad, you may not be eligible for relief, as travel outside the United Kingdom doesn’t qualify for Orchestra Tax Relief. 

Benefits Of Claiming Orchestra Tax Relief (OTR)

There are many benefits for companies looking to claim Orchestra Tax Relief. Aside from receiving a payable tax credit, OPCs can claim tax relief on many costs such as the development of your performance, rehearsal costs, artist fees, and UK core expenditure. 

Eligibility

Charities and Commercial companies can claim Orchestra Tax Relief and potentially receive a payable tax credit from HMRC. Even OPCs who are not liable for Corporation Tax can claim this creative tax relief.

Reinvest

If you’re an Orchestra Production Company, you can use Orchestra tax relief to reinvest your money in future live performances and productions.

Is my production company eligible for Orchestra Tax Relief?

Orchestral concerts must have a minimum of 12 instrumentalists (who have not been electronically amplified) who have to be the primary focus of the performance. An OPC must be solely responsible for the performance from beginning to end. This includes being actively engaged in the hiring of the performers, managing the production, performance creation, and the technicalities of said performance. 

It’s worth noting that the production company must intend for the performance to be performed live. This can either be for the paying public or educational purposes. Suppose the main object or main objects are intended for broadcast or any relevant recording avenues. In that case, even if the audience is paying members of the public for educational purposes, they are deemed ineligible. Mainly, concerts must be performed wholly by an orchestra, group, ensemble, or band.

For your company to claim OTR, you must have spent 25% of the core production budget in the United Kingdom or the European Economic Area (EEA).

Some further conditions still apply for Orchestral productions intended for the paying public, so if you’re unsure whether your production company meets the eligibility criteria outlined above, TaxBite will be happy to clear this up for you. 

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What costs can I claim with Orchestra Tax Relief?

Answered under “Qualifying Expenditure”

What is the Orchestra Tax Relief claim process?

OTR is claimed through the Corporation Tax process (CTSA). There is a section to complete on the OPC’s Corporation Tax Return (CT600). 

Supplementary information, including venue details, and expenditure records, need to be included in the return. In addition, all UK and non-UK spending must be provided in a statement form, including calculations of profits and losses. 

If you’re interested in claiming Orchestra Tax Relief, TaxBite can assist and claim on your behalf.

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How Does TaxBite Handle My Claim?

Here at TaxBite accountancy services, we are available to handle OTR claims. You can find our usual process below:

  1. Company Analysis: We complete a comprehensive research analysis of your orchestral performance company and assess your current expenditure and what qualifies for OTR or any other creative industry tax reliefs like R&D Tax Relief. 
  2. Submission: Once we’ve gathered the relevant details from your OPC, TaxBite submits the claim with HMRC. 
  3. Processing Your Claim: Orchestra Tax Relief claims will then be processed by HMRC for a payout of the tax credit. TaxBite will take care of any new requests for additional information.

OTR claims can be made or amended for up to one year from the company’s accounting period. If you’ve gone past this, late claims are sometimes accepted by HMRC. If you’re unsure – TaxBite would be happy to confirm if you are eligible.

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Allow the approachable chartered accountants at TaxBite to take the stress away from your paying tax and help you receive creative tax reliefs. Then, you can get on with your primary focus; your Orchestral concert. Whether it’s your first concert or not, here at TaxBite accountancy services, we are eager to help you today.

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