Theatre Tax Relief

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Seeing as you’ve made it to this wonderful blog post of ours, you’re most likely interested in claiming Theatre Tax Relief. In this article, we will answer key questions regarding TTR and provide you with ample important information.

As with all creative tax reliefs, eligibility is dependent on certain criteria. There is also a strict procedure that needs to be adhered to for a successful claim. Allow us to help clear things up.

What is Theatre Tax Relief (TTR)?

Theatre Tax Relief is an incentive that the British government offers to theatre production companies.

The TTR scheme can be used to claim a tax rebate against the costs incurred during the production of a play, musical, opera, or ballet.

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How much TTR can I claim?

It is possible for a theatre production company to claim a maximum of 25% of the costs spent on a theatrical production.

TTR will either come from 80% of the production’s core costs or from the core expenditure within the European Economic Area. It is the lower of the two values that the TTR will be provided for.

It will depend on the profitability – or non-profitability – of the production as to what you will receive as TTR.

Productions that make money will be given relief for the corporation tax you are entitled to pay.

For shows that make a loss, a single payment will be made in cash to the production company from HRMC. The figure will be capped at 20% for productions that take place in a single venue, while touring productions are eligible for a 25% payment.

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Am I eligible for Theatre Tax Relief?

Certain criteria have to be satisfied by theatrical companies to be eligible for TTR.

Theatrical productions eligible for TTR include musicals, plays, operas, ballets, and dramatic pieces with performers playing roles. There can be some difficulties when categorising artistic performances, so theatre companies are recommended to speak to a TTR expert if it is unclear if the show fits easily into each of these categories.

It is only possible for a theatrical production company to claim TTR if it has had complete control over all technical and creative elements of the production.

A quarter of all core expenditure incurred by the TPC has to have taken place within either the United Kingdom or the European Economic Area.

It is imperative that either the production or the majority of the performances are meant for the public. These can be paying members of the audience or invited guests who are there for educational purposes, such as school children.

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What costs can be claimed for Theatre Tax Relief?

In most cases, the only costs are those incurred in producing the show. This generally means costs that occur between the moment the wheels have been put in motion until opening night and the expenditure related to closing the production at the end of its run.

However, there are exceptional running costs, which are also possible to reclaim. If unforeseen circumstances occur during the production’s run that leads to further expenditure, then a production company could claim them as exceptional costs.

What productions qualify?

A qualifying theatrical production satisfies the previously stated criteria.

In short, this means that the production needs to be shown to a live audience, which is composed of either paying attendees or those there for educational purposes. Also, a quarter of the core production expenditure must be incurred within the United Kingdom or the EEA.

What expenditure qualifies?

Expenditure that occurs during three of the four phases of production is covered by TTR.

Prior to the first paid performance of the show, expenditure is covered by Theatre Tax Relief. That means that the development of the production qualifies, as do any costs incurred during the rehearsal period, such as set production costs.

Costs during live performances are not covered unless they can be described as ‘exceptional’. Examples of exceptional costs include needing to recast an actor during the production run. Also, needing to build a new set would also qualify.

At the end of the run, the production enters the closing phase, which means removing the set, packing up costumes etc. Costs incurred during this production phase can also be reclaimed by theatre production companies.

Theatre Tax Relief Eligibility Criteria

The criteria to receive Theatre Tax Relief is as follows:

Only productions that can be described as a dramatic production, a play, a musical, an opera, or ballet will be liable to receive TTR. A high proportion – if not all – of the performers in the production must be human beings.

Live performances are mandatory, i.e. a theatre production that simply shows filmed performances will not be eligible for TTR.

The production company needs to have creative and technical control over the production and pay for services provided, goods, and any intellectual rights. That means the company has to be actively engaged in decision-making in technical and creative aspects.

On top of this, it is necessary that a quarter of the production’s financial outlay is spent either within the UK or the EEA.

It’s also imperative that from the earliest stage of planning the production, it is clear that it will be performed in front of a paying audience or that it will be performed for educational purposes.

Which companies can claim?

If a company satisfies all the aforementioned criteria, it can claim Theatre Tax Relief. Whether the theatre company is an unincorporated association or a community interest company, like many charitable companies are, then it is irrelevant.

Is BFI cultural test required to claim?

Claiming theatre tax relief does not require a BFI cultural test. Dramatic productions are classified differently from film productions; therefore, the British Film Institute doesn’t need to be involved. This makes TTR different to other creative industry tax reliefs, such as Film Tax Relief.

Who cannot claim theatre tax relief

A theatre production will be illegible for TTR if it falls into any of the following categories.

  1. The production needs to be primarily for artistic purposes. If either of the main objects of the production is for selling goods or advertising goods or services, then TTR cannot be claimed.
  2. All productions that feature a wild animal are precluded from a payable tax credit. This also goes for performances wholly of sexual nature. A dramatic piece that includes some sexual content is eligible.
  3. If the production is simply made for the purpose of a relevant recording, then theatre tax credit cannot be claimed.
  4. Competitions are also not covered.

If you’re still unsure, our team of chartered accountants can confirm if you can claim TTR:

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How and when to claim

Qualifying theatrical productions require the company to make a claim when you file your Company Tax Return for Corporation Tax. For the procedure to run smoothly, it is advised that production companies ensure that the payable credit due and additional deduction is calculated.

If shows occur at separate premises, such as theatre productions that go on tour, you must ensure that you provide the dates and locations for each and every live performance.

It is possible to alter or remove any claims for twelve months after the company’s filing date.

There is also the possibility that HRMC will accept late claims in certain circumstances. There is detailed guidance available for such cases. Contact us if you’re worried you’ve missed your chance.

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What is the Theatre Tax Relief (TTR) claims process?

The process involves filling in the correct form when filing your corporation tax return. The relevant form is CT600.

Basic information such as the production’s title and the opening night date is required.

Also required is a breakdown of the total core expenditure. It is also important that core expenditure in the UK and the EEA are categorised separately. The additional deduction and payable credit due will need to be calculated too.

Another element of the process requires the company to state whether the production statements show that it has been either loss-making or profit-making. In the first circumstance, a cash payment will be offered for a loss-making production, and in the latter case, a tax reduction will be provided for a profit-making production.

How to calculate theatre tax relief?

The amount that qualifying productions can claim in tax relief will depend on the amount of money spent. Depending on the total qualifying expenditure, you can expect to reclaim between 20% and 25%.

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As you’ve already read, the TTR process is complex. Allow our team to lift the burden, and talk to us today about how we can help you claim.

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