Orchestra Tax Relief
Published 9 December 2015
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Who is likely to be affected
Incorporated companies within the charge to Corporation Tax (CT) that are directly involved in the production of orchestral concerts.
General description of the measure
The measure will enable eligible companies to claim tax relief for qualifying expenditure on orchestral concerts. Relief will apply at a rate of 25% on enhanceable expenditure for all eligible concerts.
Policy objective
This measure will promote British culture in a sustainable way by providing support to orchestras in the UK.
Background to the measure
Orchestra tax relief was announced at Autumn Statement 2014. A consultation on the design took place in early 2015. The rate of relief was announced at March Budget 2015 and a consultation response document was published on 24 March 2015.
Detailed proposal
Operative date
The measure will have effect for qualifying expenditure incurred on and after 1 April 2016.
Current law
There are currently no targeted tax reliefs for this sector.
The new tax relief for orchestral concerts is based on the successful Film Tax Relief (FTR). Since its introduction in January 2007, the FTR has supported £11.6 billion of investment into 1,680 British films, which have received approximately £1.2 billion in relief.
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to provide a CT relief for orchestral concerts. The tax relief for orchestral concerts will allow eligible companies engaged in the production of qualifying orchestral concerts (or a series of concerts) to claim an additional deduction in computing their taxable profits. Where that additional deduction results in a loss, that loss may be surrendered for a payable tax credit.
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 |
|---|---|---|---|---|
| - | - 5 | -10 | -10 | -10 |
These figures are set out in the policy costings document published alongside March Budget 2015 and have been certified by the Office for Budget Responsibility.
Economic impact
This measure is not expected to have any significant macroeconomic impacts but will have a positive impact on the orchestral sector. The costing includes a behavioural effect to account for an increase in the amount of orchestras’ qualifying expenditure.
Impact on individuals, households and families
This measure will provide a CT relief to qualifying companies. It is not expected to have an impact on individuals, households or the formation, stability or breakdown of families.
Equalities impacts
This measure will provide a CT relief to qualifying companies. After careful consideration, the government has concluded that there are no significant impacts on people with protected characteristics and has not identified any equalities impacts.
Impact on business including civil society organisations
This measure will benefit a range of orchestras and is expected to increase economic activity within that sector. Approximately 1,000 companies are forecast to be within scope of this relief.
Eligible companies may face some one-off and on-going administrative costs in order to qualify for this relief. HM Revenue and Customs (HMRC) expects the total one-off costs associated with familiarisation with the new legislation, processes and requirements to be negligible. The on-going costs, which will include the costs of calculating and claiming the relief, are also expected to be negligible. The government consulted widely to ensure that the design of the relief would work for orchestras, including those in the not-for-profit sector. The government estimates that the additional costs incurred by corporate charities will be similar to those incurred by other companies.
Small and micro business assessment: the impact on small and micro businesses is expected to be the same as those for all businesses which will be eligible for the relief.
Operational impact (£m) (HMRC or other)
The estimated annual cost to HMRC of administering the relief is £230,000.
Other impacts
Competition assessment: this relief is targeted at a particular sector. All companies in this sector will be eligible, so the policy’s introduction is unlikely to affect competition within the sector. There should not be any significant impact on competition with other business sectors.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups. HMRC will monitor this measure through the analysis of claims data.
Further advice
If you have any questions about this change, please contact Kerry Pope on Telephone: 03000 585740 or email: kerry.pope@hmrc.gsi.gov.uk.