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HMRC internal manual

Theatre Tax Relief

HM Revenue & Customs
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Eligible expenditure: distinguishing 'development' and 'running' from other phases

Theatre Tax Relief (TTR) for theatrical productions is available on expenditure incurred in relation to specific phases of the production: the production and closing phases.  It is therefore important to identify and quantify expenditure contributing to these phases.

The production process may vary significantly between different theatrical productions and particularly where different theatrical production techniques are involved.  However, in most cases it should be straightforward to distinguish between activities that constitute development or running of a production from activities that constitute production or closing of a production.

The development phase is essentially a speculative phase.  It is during this phase that activities are undertaken with the aim of determining whether or not the production is a commercially feasible project which might proceed to the later phases of production.

Expenditure purely on development activities is not core expenditure and does not qualify for TTR.

The production phase, in contrast, is not speculative. The activities undertaken during this phase of production are carried out in the knowledge that a decision has been made that the production will go ahead.  Such activities can, however, be undertaken even where some development activities are still taking place.

Activities carried out in the knowledge that the project may possibly not proceed are not necessarily development activities.  For example, script development can be an essential part of a theatrical production project being green-lit but also a necessary part of producing a production.

The production phase involves all the activities necessary to turn the developed idea for a production into an actual theatrical production that is ready to be performed live to a paying general public or provided for educational purposes.  Such activities may include, among many other things, production team meetings, casting, script-readings, rehearsals, costume design and set construction.  For TTR purposes therefore the production phase is broadly defined and includes activities often referred to as pre-production.

The production phase normally starts when a production is ‘green-lit’ and ends when the curtain goes up for the first live performance to the paying general public or performance for educational purposes.

Expenditure incurred on production activities is core expenditure that qualifies for TTR and can potentially be incurred whilst development activities are still ongoing.

The running phase covers the period from when the curtain goes up for the first live performance to the paying general public or provided for educational purposes to the conclusion of the last such live performance.

Expenditure incurred on ordinary running costs is not core expenditure and does not qualify for TTR.  However, in certain circumstances, exceptional running costs may be treated as production expenditure (TTR10130) which is core expenditure and does qualify for TTR.

The closing phase is the final phase of production during which sets are struck, put into storage, sold or broken up.

Expenditure on closing a production is core expenditure and qualifies for TTR.

For more information about the phases of production see TTR10130.

Expenditure attributable partly to development and partly to production

Some costs relate both to the development phase of a theatrical production and to other phases of production.  Examples of such costs would be those incurred on the script and the producer’s fee.

In each case it is necessary to establish to what extent the expenditure is incurred on establishing whether a production can be made and how far it is incurred on actually making the production.

The correct apportionment will vary according to circumstances. There is no definitive apportionment method and any just and reasonable method may be used.  A Theatrical Production Company (TPC) may rely on an estimate used in the production of previous theatre productions, but this will only be appropriate where the facts are similar.


A producer works substantially full time on a theatrical production for a year.  For the first three months, the producer leads the development of a production that is subsequently given the go ahead, for the next six months the producer is heavily involved in the production activities and for the remaining three months oversees the running phase.

In this case, it would be just and reasonable to allocate one half of the producer’s fees, for that period, to production.  That is, 50% of the producer’s annual fee would be treated as core expenditure.  Dependent on whether some of the development activities undertaken by the producer were ultimately directly related to producing the production, it may in fact be just and reasonable to treat more than 50% of the fee as core expenditure.

A script could likewise be used during the development phase of a theatrical production as well as the later phases of production.  If the original script was more or less unchanged through this process then it may be reasonable to allocate its costs according to how it is used through the various phases of production.  This could be evidenced by the extent to which reference is made to it throughout these phases.

It may be the case that the script writer is paid an initial fee for a first draft of the script for development purposes followed by further fee payments as production proceeds and refinements are made.  In these circumstances, it may be reasonable to allocate costs according to the timing of payments and the use to which the various versions are put.

If a single rough draft of the script is required for the development stage, the initial fee related to this would be development expenditure and not included in core expenditure.  Provided that all subsequent payments for script writing follow the decision to proceed with the theatrical production, then these may be treated as expenditure on producing the production and therefore as core expenditure.