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 EEA 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 EEA core expenditure incurred.
EEA core expenditure is the amount of core expenditure incurred by the OPC which is also EEA expenditure. EEA expenditure is expenditure on goods or services that are provided from within the EEA.
If non-EEA 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 EEA
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 EEA 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 EEA and part non-EEA
An OPC incurs £2m of core expenditure on a concert or series, of which £1.25m is EEA expenditure. The remainder is incurred on goods or services that are provided from within the USA and is therefore non-EEA expenditure.
Actual EEA core expenditure less than 80% of total core expenditure.
The OPC can claim OTR on actual EEA core expenditure. The additional deduction is therefore £1.25m.