Orchestra Tax Relief: calculation: introduction
Orchestra Tax Relief (OTR) is only available to Orchestral Production Companies (OPCs) that undertake qualifying concerts.
A company meeting the definition of an OPC is entitled to claim OTR on EEA core expenditure on a concert or series of concerts provided:
- the concert or series is intended to be performed live before paying members of the general public, or provided for educational purposes
- the concert or series is one that is a qualifying concert or series and
- not less than 25% of the total core expenditure is EEA expenditure
Benefits of OTR: additional deduction and orchestra tax credit
An OPC entitled to OTR can claim an additional deduction in computing its taxable profits relating to a separate orchestral trade. .
The additional deduction can:
- reduce the taxable profits of the separate orchestral trade (so that the company pays less tax), or
- create or increase a tax loss, which the company can surrender in return for a payable Orchestra Tax Credit (OTC).
OTR only available to companies
OTR is not available to individuals, either alone or within partnerships, or to investors, financial institutions and those whose involvement in CONCERT production is confined to providing or arranging finance.
The purpose of targeting the relief exclusively at OPCs is to ensure that Government support is delivered directly to concert production and is not used as a means of avoiding tax. It also ensures that such support is delivered to production activity in its entirety.
Core expenditure before 1 April 2016
OTR was introduced from 1 April 2016. Strictly, only expenditure incurred after this date is eligible for an additional deduction.
However, as a concession for the transitional period, HMRC will allow expenditure incurred before the commencement date to be included in the calculation of the additional deduction if the goods or services for which that expenditure was incurred were not used or provided before 1 April 2016. If you have queries relating to this, please refer, in the first instance to the Creative Industry Unit in Manchester.