Overview and general definitions: introduction
Part 15C Corporation Tax Act 2009
Finance Act 2014 introduced a new regime for the taxation of Theatrical Production Companies (TPCs) that claim a new relief for the theatre industry: Theatre Tax Relief (TTR).
The legislation provides specific rules for relief on theatrical productions, including touring productions, in addition to setting out how the taxable profits and losses of those productions shall be calculated.
The legislation only applies where a claim to TTR is made by a TPC (TPC10110) in respect of its qualifying theatrical production (TTR40030).
For tax purposes only, the legislation:
- deems that each production is a separate theatrical trade with a start and end date separate to that of the company
- describes what expenditure is eligible for additional tax relief and circumstances where there are exceptions to the normal rules for income and expenditure, and
- restricts the use of losses associated with that separate theatrical trade in certain circumstances.
Theatre Tax Relief (TTR)
TTR is available to TPCs engaged in the making of:
- theatrical production (TTR40020)
- for live performance to paying members of the general public or provided for educational purposes (TTR40030), and
- at least 25% of the core expenditure (TTR50010) is incurred on goods or services provided from within the European Economic Area (EEA) (TTR50050).
Those TPCs that are entitled to TTR can claim:
- an additional deduction in computing their taxable profits (TTR55010), and
- where that additional deduction results in a loss, to surrender losses for a Theatre Tax Credit (TTC) (TTR55100): a payable tax credit due to the TPC.
Theatre Tax Credit rates
The TTC rates are:
- 25% for touring productions, and
- 20% for all other qualifying productions.
Both the additional deduction and the Theatre Tax Credit are calculated on the basis of core expenditure up to a maximum of 80% of the total core expenditure by the TPC. Core expenditure is that expenditure directly incurred in producing the production and closing the production.
TTR commenced on 1 September 2014.