Examples of Theatre Tax Relief claims?
Example 1 (additional deduction)
A company put on a non-touring production of Peter Pan. It receives income from the production of £3m (after deducting non-core expenditure) and has total core expenditure of £1.5m (all EEA expenditure). Without Theatre Tax Relief, the company would be liable to pay Corporation Tax of £285k (19% x £1.5m profit).
Expenditure on the production is eligible for Theatre Tax Relief. The company is entitled to an additional deduction of £1.2m (80% x £1.5m total core expenditure) in computing its taxable profits from this production, which reduces the taxable profit to £0.3m.
The additional deduction claimed under Theatre Tax relief reduces the Corporation Tax liability to £57k (19% x £0.3m), therefore the benefit of the Theatre Tax Relief claim is £228k (£285k-£57k).
In this example, the Theatre Tax Relief is worth 15.2% of the total core expenditure on the production.
Example 2 (loss-making)
A company put on a touring production of Oliver. Income from the production is £450k (after deducting non-core expenditure). The total core expenditure is £500k (i.e. qualifying costs incurred in the production and closing phases), all of which is EEA expenditure.
The loss from the production, before Theatre Tax Relief, is therefore £50k (£450k – £500k).
The surrenderable loss is the lesser of:
- The £450k trading loss after Theatre Tax Relief (£50k loss less 80% of £500k), and
- The £400k additional deduction (£500k x 80%)
The company can surrender up to £400k of losses.
The company is therefore eligible for a repayable tax credit of up to £100k (25%
Theatre Tax Credit for touring productions x £400k loss surrendered).
In this example, the Theatre Tax Credit is equal to 20% of the total core expenditure.
Want to find out more information?
- Who can claim?
- What is a Theatrical Production Company?
- Which costs are allowable?
- How is the relief calculated?
We pride ourselves on our proven track record of successful claims and we are committed to assisting our clients in maximising their claims to include all eligible costs.
We would be happy to discuss whether you might be able to qualify for Theatre Tax Relief and answer any queries you may have.