Calculation: rates of relief
S1217K Corporation Tax Act 2009
Where a Theatrical Production Company (TPC) claims Theatre Tax Relief (TTR) in respect of enhanceable expenditure (TPC55020), the amount of Theatre Tax Credit (TTC) to which it is entitled depends on whether the production is a touring production or a non-touring production.
|Type of production||TTC rate|
|Touring production||25% of the amount of the loss surrendered|
|Non-touring production||20% of the amount of the loss surrendered|
See TTR55031 for the definition of a touring production.
TPCs receive a higher rate of TTC for touring productions than they do for non-touring productions in recognition of the additional costs associated with performing productions across different premises.
The value of TTR will depend on whether or not the separate theatrical trade is loss-making, whether the production is a touring or non-touring production and the prevailing rate of Corporation Tax.
The table below shows the value of the TTR assuming in each case that:
- at least 80% of the total core expenditure is EEA core expenditure, and
- the rate of Corporation Tax is 21%.
|TPC with sufficient taxable profits to absorb all of the additional deduction||Enhanceable expenditure = 80% of total expenditure|
Value of TTR for touring or non-touring production
= 80% x 21%
|= 16.8% (reduction in Corporation Tax payable)|
|TPC has no taxable profits and claims the maximum amount of theatre tax credit||Enhanceable expenditure = 80% of total expenditure|
Value of TTR for touring production
= 80% x 25%
= 20% (theatre tax credit)
Value of TTR for non-touring production
= 80% x 20%
|= 16% (theatre tax credit)|
This means that there will normally be both a timing benefit and an overall financial benefit to surrendering losses for a theatre tax credit. However, this might not be the case where the special terminal losses rules apply.
The anti-avoidance provisions for TTR prevent a company artificially inflating production costs in order to increase relief or theatre tax credit (TTR80020). These provisions will also apply to the situation where income is not recognised or deferred to increase the surrenderable loss.