Theatre Tax Relief; what is it and who can benefit?

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John Howard, Partner

John heads up the firm's charities sector group and has more than 20 years’ experience in the accounting profession.

June 27, 2019

 

John Howard, Head of Charities and Not-for-Profit at Wilkins Kennedy looks at who can benefit from Theatre Tax Relief.

Available to companies, including charities, that qualify as Theatrical Production Companies, Theatre Tax Relief (TTR) was first introduced on 1st September 2014 via the Finance Act 2014 as a part of the group of reliefs for creative industries.

Who can benefit?

Theatrical Production Companies, within the charge to Corporation Tax that are producing a qualifying production.  The qualifying production must meet the following criteria:

  • it must be a dramatic production where the performers are wholly or mainly playing a role. This production could be a play, opera, musical or ballet
  • its primary focus is the presentation of live performances to paying members of the public or for educational purposes; and
  • a minimum of 25% of core expenditure must be incurred within the European Economic Area (EEA).

There was a common misconception amongst charities that they were not able to claim TTR because they didn’t prepare a corporation tax return or pay corporation tax.  However, as long as the charity is a company, a charitable incorporated organisation (CIO or SCIO) or a community interest company (CIO) then it will fall within the Corporation Tax regime and is eligible to apply for TTR.

What can be claimed?

For a charity making a TTR claim, where that charity is usually exempt and has no sources of taxable income, the additional deduction for TTR will create a loss which can be surrendered and a claim is then made for a payable tax credit from HMRC.

TTR has two rates of payable credit being 25% for touring productions and 20% for others.

A theatre production has four phases for tax purposes, being development, production, running and closing.  Broadly, it is costs incurred in the production and closing phases, described as ‘core expenditure’ that can be included in the TTR claim.

How can Wilkins Kennedy help?

We have found that TTR is a tremendous source of funds for theatre production companies.  Since it was introduced in September 2014, £137 million has been paid out in respect of 1,670 claims. 

Our specialist team at Wilkins Kennedy has generated tax credits for charity and non-charity clients of more than £1 million and is ready to assist theatres in helping to identify qualifying productions, helping through the claims process, liaising with HMRC and preparing the relevant returns.

If you think your business might be eligible and you would like to find out more, contact john.howard@wilkinskennedy.com


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