OTR70020 - Orchestra Tax Relief: calculation: maximum amount of core expenditure subject to claim
S1217RE Corporation Tax Act 2009
The amount of Orchestra Tax Relief (OTR) available is based on the European core expenditure of each separate orchestral trade. The Orchestra Production Company (OPC) will receive an additional deduction of up to 80% of the total core expenditure incurred on the production.
An OPC can claim OTR on the lower of:
- 80% of total core expenditure, and
- the actual European core expenditure incurred.
European core expenditure is the amount of core expenditure incurred by the OPC that is also European expenditure. European expenditure is expenditure on goods or services that are provided from within the UK or EEA.
If non-European core expenditure is not more than 20% of total core expenditure it will have no bearing on the amount of OTR an OPC can claim.
The amount on which the OPC is entitled to claim an additional deduction under OTR is termed enhanceable expenditure.
Example 1: core expenditure all European
An OPC incurs £1m of core expenditure on a concert or series, all of it on goods or services that are provided from within the EEA.
Actual European core expenditure more than 80% of total core expenditure.
The OPC can claim OTR on 80% x total core expenditure. The additional deduction is therefore £0.8m.
Example 2: core expenditure part European and part non-European
An OPC incurs £2m of core expenditure on a concert or series, of which £1.25m is European expenditure. The remainder is incurred on goods or services that are provided from within the USA and is therefore non-European expenditure.
Actual European core expenditure less than 80% of total core expenditure.
The OPC can claim OTR on actual European core expenditure. The additional deduction is therefore £1.25m.