Theatre Tax Relief was announced in Finance Act 2014 and effective from 1 September 2014. Detailed guidance for theatrical companies, including examples of how the relief is calculated, can be found in the Theatre Tax Relief Manual.

The updated guidance from HMRC is reproduced below.

Who can claim

Your company can claim Theatre Tax Relief if:

• it puts on one of the following qualifying theatrical productions:
  • a play, opera, musical or other dramatic piece, where the performances are live and the performers give their performances wholly or mainly through the playing of roles
  • a ballet
• all, or a high proportion, of the performances, will be to paying members of the general public or provided for educational purposes
• at least 25% of core expenditure is on goods or services provided from within the European Economic Area (EEA).

Core expenditure is what’s spent on producing the production.

Your company must also:

• be actively engaged in planning and decision-making
• directly negotiate, contract and pay for rights, goods and services.

Who cannot claim

Your company cannot claim Theatre Tax Relief for the production if:

• the main purpose, or one of the main purposes, is to advertise or promote any goods or services
• the performances consist of or include a competition or contest
• a wild animal is used in any performance
• the production is of a sexual nature
• the main object, or one of the main objects, is to make a relevant recording.

What you can claim

You can claim an additional deduction to reduce your profits or to increase a loss. This will reduce the amount of Corporation Tax you will need to pay. If you make a loss, some or all of this loss can be surrendered for a payable tax credit.

The standard rate for surrendering losses is 20%. You can surrender losses at a higher rate of 25% if your production is touring. For your production to be considered as touring, at least one of the following must apply:

• at the start of the production phase, you must intend to have performances at 6 or more separate premises
• there will be at least 14 performances and these will be in at least 2 separate premises.

The additional deduction will be the lower of:

• 80% of total core expenditure
• the amount of core expenditure on goods or services that are provided from the EEA.

How and when to claim

You can claim for relief on your Company Tax Return. You will need to calculate the amount of:

• additional deduction due to your company
• any payable credit due.

You should also provide:

• the title of the production
• statements of the amount of core expenditure, split by EEA and non-EEA expenditure
• a breakdown of expenditure by category.

If you’re claiming the touring rate of relief, then you also need to provide the dates and number of performances at each premises.

You may make, amend or withdraw a claim to creative industry tax reliefs up to one year after the company’s filing date.

HMRC may agree to accept late claims in some circumstances.