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HMRC internal manual

Theatre Tax Relief

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 unless the production goes on to the production phase. Development costs of productions that move into the production phase qualify as core expenditure at the time the decision to produce is taken.

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.  

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. The production phase can continue through a preview period but normal running costs for that period will not rank as core expenditure.

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.