Theatre and live performance companies that produce musicals, dramas, operas etc. may be able to claim a relief from HMRC that can increase the allowable expenditure for tax purposes or if the company makes a loss can be surrendered for a tax refund.
Claiming a relief from HMRC
The relief only applies to qualifying theatrical companies and performances that meet the criteria. Theatre tax relief only applies to a UK company (including charities) or an overseas company with a UK branch or presence. Partnerships and individuals are not able to claim relief.
Theatrical productions must be performed either commercially or for educational purposes. The company can claim an additional deduction from taxable profits or surrender a loss for a cash repayment from HMRC. At least 25% of the total production costs must relate to activities in the European Economic Area (EEA).
WR Partners has extensive experience in claiming back valuable tax relief for the creative sector.
Who qualifies for Theatre Tax Reliefs (TTR)?
The theatre company must be responsible for producing, running and closing the production. They should be actively engaged in decision-making during the production, running and closing phases of the performance. The theatre company should directly negotiate and pay for the goods and services in relation to the production, although it is possible to commission a third party – as long as the theatre company is still actively involved in the production.
What is a qualifying theatrical performance?
- Production of a play, an opera, a musical, or another dramatic piece where the performers give their performances wholly or mainly by playing a role.
- Ballets may only qualify where there is a dramatic narrative. Other forms of dance will not qualify unless an incidental part of a dramatic performance.
- A dramatic production will not qualify if the main purpose, or one of its main purposes, is to advertise or promote goods or services. Crucially, the performance cannot be or include a competition; or the making of a recording the main object of the company’s activities.
What is the benefit of TTR?
The theatre company will be able to deduct an additional 80% of qualifying production costs from their profits to reduce their profits subject to tax or create a loss that can be surrendered for a cash payment from HMRC. Typically, expenses relating to developing, producing and closing the production would qualify for a deduction. Normal running costs do not qualify.
Touring performances have a higher tax credit than those that are non-touring, touring must be shown at several different locations.
Up to 27 October 2021, a qualifying loss can be surrendered for a payment from HMRC of either 20% or 25% of the loss. As part of the changes the government made to the creative tax reliefs, there was an increase in the rates of theatre tax credits from 27 October 2021 from 25% to 50% for touring productions and 20% to 45% for non-touring. These rates will then decrease to 35% and 30% respectively from 1 April 2023 until 1 April 2024 when the rates will return to their original amounts of 25/20%.
FAQs
Where can I get tax advice?
Our tax consultancy team at WR Partners is able to provide tax advice on a wide range of taxes.
What is tax advice?
Tax advice can cover income tax or corporation tax advice on your business profits as well as VAT on business transactions. It can include capital gains tax or stamp duty land tax advice on disposing of a property as well as inheritance tax when you pass assets on to others.
Is tax advice confidential?
Absolutely – we never share tax advice provided to our clients with third parties unless the client specifically requests that we do so.
Can I claim financial advice as a tax deduction?
That will depend on the nature of the advice – there is no hard and fast rule, unfortunately.
How do I work out VAT?
Broadly speaking, VAT is 20% of your taxable supplies. In your VAT return, you can deduct 20% of the associated input VAT and the result is the amount owed to or from HMRC.
What are the types of property tax in the UK?
There are many different types of taxes on property. There are corporate taxes if the property is held by a company, such as corporation tax and the annual tax on enveloped dwellings. There are individual taxes such as income tax on rental profits and capital gains tax if a property is disposed of. There are also transaction taxes (SDLT, LTT or LBTT depending on where the property is in the UK).
Is there a difference between English and Welsh tax systems?
For income tax, the Welsh Government is able to vary the income tax rate to a point. To date, they have chosen to keep the same rate as for taxpayers in England. This means that Welsh taxpayers should identify which country they are paying tax in, in order to pay to the right authority. This can be done through your PAYE code but also it is declared in your self-assessment tax return. There are also differences between the English Stamp Duty Land Tax and the Welsh Land Transaction tax.
How do I reduce my tax?
There are a variety of ways to mitigate a tax charge. Depending on your circumstances this might be by claiming a particular relief or expense against your taxable income or reducing the tax you pay because some types of income or gains attract lower tax rates.
Get in Touch
We love meeting new, exciting businesses. Get in touch with our team to see how we could enhance and protect your financial position.
Or if you’d prefer to speak to someone directly just give us a call on: 08000 664 664 or email: hello@wrpartners.co.uk.
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