Theatre Tax Relief – the scope is wider than you think

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.

As the country gears up for the usual array of Christmas pantomimes and plays, the number of eligible Theatre Tax Relief (TTR) claimants is on the rise; however, many remain unaware that they could be entitled to a tax saving or repayable tax credit of up to £1,600 for every £10,000 spent on producing an event.

What is Theatre Tax Relief (TTR)?

TTR is part of a suite of 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.

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 the 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.

Could it apply to my company?

Since the scheme’s introduction in 2014, there has been a feeling of confusion in some sectors around the types of claimants eligible for TTR, with many organisations perhaps wrongly believing that the scheme is available only to theatre companies in the ‘traditional’ sense. The reality is that the range of organisations eligible to claim for TTR is far wider than many businesses realise. The scheme applies to anyone who can legitimately claim to be staging a dramatic production, where the performers act out a role to the live paying audience (or for educational purposes) . As an example, a murder mystery evening could be eligible, as performers act out roles to ‘guests’ as part of an immersive dramatic production. A circus however, would be unlikely to be able to claim TTR, as the performers are not taking on roles and it therefore cannot be classed as a dramatic production.

Britain has a rich culture of theatre and drama which is evolving at a rapid pace. The rising popularity of immersive theatre, particularly at attractions such as theme parks, garden centres or seasonal events around Halloween and Christmas, means that a whole raft of new organisations could be missing out on an important form of tax relief, simply because they don’t think it applies to them.

Another type of organisation which does not immediately seem likely to be eligible for TTR is a charity. Since charities do not normally pay corporation tax, it seems unusual for them to be included. However, if they can demonstrate that they are staging a dramatic production, then the scheme is open to them and they can make a claim which may result in the payment of a tax credit.

Why should I consider TTR now?

Uncertainty around who the scheme applies to means that there could potentially be many more businesses that won’t have enquired about TTR or won’t realise they are eligible. Many businesses have their year end between December and March and for those that may have staged a production during Christmas 2014, failing to make a claim within the next few months could mean that they miss the two-year window in which to do so and the opportunity to recoup costs may be missed.

In the run up to Christmas, when Santa’s grottoes and pantomimes appear in every town and city, companies need to be aware that TTR exists or they could be missing out on an opportunity to claim significant benefits.

For more information about the implications of Theatre Tax Relief please contact Senior Manager Will Sweeney by email at wsweeney@menzies.co.uk or by phone on 01483 758926.