It’s one of the lesser-known forms of government financial aid available, but the Theatre Tax Relief scheme, first introduced in September 2014, should be a key consideration for a range of businesses, not just those traditionally associated with theatre.
Theatre Tax Relief is part of a suite of tax reliefs for creative industries introduced by the Government to encourage and promote growth in areas, such as the performing arts where the UK potentially has a competitive advantage. Any company staging a live performance where the performers play a role can make a claim based on expenditure incurred in producing and closing the event.
What is Theatre Tax Relief?
The TTR scheme is designed to benefit both profitable and loss-making companies, as well as those who may be able to claim an exemption from corporation tax. It works by reducing the amount of taxable profits for production companies so as to reduce their tax liability. In cases where the production company is loss-making, losses relating to the production can be boosted and surrendered in return for a cash tax credit.
For every £100 spent on producing a theatrical production, £180 of relief is obtained. Effectively the net production cost for a profitable company is only £64 per £100 spent.
If the company is loss making for the period, then they may be able to surrender all or part of the loss and claim a repayable tax credit from HMRC. The surrenderable amount is the lower of:
- The unrelieved trading loss; and
- 80% of the core production expenditure
The repayment is 20% (25% for touring productions) of the surrendered loss.
Who can benefit from Theatre Tax Relief?
Companies will qualify for Theatre Tax Relief if they:
- Are a theatre production company; and
- Produce a qualifying theatrical production; and
- Intend at the outset that a high proportion of the live performances are to be given to paying members of the general public or for educational purposes; and
- At least 25% of the core expenditure incurred in producing the production is incurred within the (European Economic Area) EEA.
It is important to note that you may qualify as a theatre production company even if this is not the main purpose of your trade.
How we’re helping clients with Theatre Tax Relief claims
In the 12 months to 30 September 2017 we have:
- Made numerous claims for companies in a wide variety of sectors including theatres, events companies, theme parks, and garden centres.
- Generated more than £1 million of tax savings and repayments.
How can Menzies help?
Menzies’ specialist Creative Sector Team works in partnership with clients and other professionals to provide a commercially relevant and effective tax planning service, from concept development through to collating and presenting claims in a format to expedite the Theatre Tax Relief claims process.
- Navigating you through the claims process from recording, reporting and final submission.
- Applying specialist knowledge of the TTR tax regime to help you identify qualifying productions.
- Considering other relevant or complementary tax reliefs that may apply to the theatrical productions.
- Identifying, and improving methods for identifying, core expenditure to maximise effectiveness of the reliefs.
- Presenting information to minimise exposure to challenges from HMRC.
Contact Menzies Theatre Tax & R&D team
To speak to a partner or for more information about the tax services we offer please contact one of the Menzies LLP offices or complete our contact from below.