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HMRC internal manual

Theatre Tax Relief

Taxation: profit/loss calculation: income: nature

S1217IB Corporation Tax Act 2009 (CTA 2009)

Where the profits or losses of a separate theatrical trade of a Theatre Production Company (TPC) (TTR20010) are within the rules in Part 15C CTA 2009, the income to be brought into account is all the receipts of the trade of making, or making and exploiting, the production.

This means all the money received from generating income from the theatrical production in the widest sense, including, but not limited to:

  • receipts from the sale of the theatrical production, or rights in the production
  • royalties or other payments for the rights to use the production or aspects of it (for example, characters, sets or music)
  • payments for rights to produce merchandise, and
  • receipts by way of a profit share agreement.

Theatre Tax Credits (TTCs) due or paid to the TPC in connection with a production are not regarded as income from the relevant production.

Loans and grants

Receipts such as grants may be income where they are unconditional contributions to the costs of the production.  Loans are not trade receipts and, as with any other trade, they are not counted as income of a separate theatrical trade.  It may not be obvious whether a receipt is a loan or not.

Theatre financing may involve bringing in money from a wide range of sources, and promising investors/contributors a contingent return on their money.  Sometimes it may be difficult to decide the character of a receipt or loan.  Some funders may impose standard terms but each receipt will have to be viewed on its own conditions.