Finance Act 2014 introduced a new regime for the taxation of Theatrical Production Companies (TPCs) that claim a new relief for the theatre industry: Theatre Tax Relief (TTR).
The legislation provides specific rules for relief on theatrical productions, including touring productions, in addition to setting out how the taxable profits and losses of those productions shall be calculated.
For tax purposes only, the legislation:
- deems that each production is a separate theatrical trade with a start and end date separate to that of the company
- describes what expenditure is eligible for additional tax relief and circumstances where there are exceptions to the normal rules for income and expenditure, and
- restricts the use of losses associated with that separate theatrical trade in certain circumstances.
Theatre Tax Relief (TTR)
TTR is available to TPCs engaged in the making of:
- theatrical production (TTR40020)
- for live performance to paying members of the general public or provided for educational purposes (TTR40030), and
- at least 25% of the core expenditure (TTR50010) is incurred on goods or services provided from within the European Economic Area (EEA) (TTR50050).
Those TPCs that are entitled to TTR can claim:
- an additional deduction in computing their taxable profits (TTR55010), and
- where that additional deduction results in a loss, to surrender losses for a Theatre Tax Credit (TTC) (TTR55100): a payable tax credit due to the TPC.
Theatre Tax Credit rates
The TTC rates are:
- 25% for touring productions, and
- 20% for all other qualifying productions.
Both the additional deduction and the Theatre Tax Credit are calculated on the basis of core expenditure up to a maximum of 80% of the total core expenditure by the TPC. Core expenditure is that expenditure directly incurred in producing the production and closing the production.
According to The Stage ..
Productions only qualify if they are live performances to paying members of the public, and aim to make a profit.
Productions performed in schools are the only exception to this, and are still eligible for the tax relief as they are for “educational purposes”.
Tax relief can be claimed on performances that are live streamed as part of schemes such as NT Live, as long as the company’s main aim is to stage live performances for paying, present audiences.
Likewise, performances that are recorded are also eligible as long as the recording is not the aim of the production’s overall run.
Circus productions are only eligible if they are “scripted”, “dramatic” and the performers “play a role”, rather than being simply “a display of athleticism, skill or strength”.
Other art forms that are eligible include ballet, contemporary ballet which incorporates classical ballet, and other dance performances that are “dramatic productions”.
HMRC has a specialist unit, the Creative Industries Unit, to deal with claims to Theatre Tax Relief (TTR) and the other creative industries tax reliefs (for example, film and video games).
The unit can be contacted by email at email@example.com or by telephone on 03000 510191. Alternatively, the unit can be written to using the following correspondence address:
The Creative Industries Unit
Manchester Incentives & Reliefs Team
Local Compliance S0717
PO Box 3900