Theatre Tax Credits
The United Kingdom's theatre industry has long been known for its rich history and vibrant cultural scene. However, despite its significance, the industry has faced many challenges over the years, not least covid.
In 2014, the UK government launched a tax relief program to promote the creative sectors, including, among others, theatres designed to encourage investment in live productions, fostering innovation and generating jobs in this important sector and at the same time attracting audiences.
Theatre tax credits explained
The introduction of theatre tax credits has brought about numerous benefits for theatre productions in the UK. Firstly, it has provided financial support to help offset the prohibitive costs associated with producing live performances enabling theatres to take on more ambitious projects than would otherwise have done.
Theatre tax credits have allowed theatres to collaborate with production companies, allowing the creation of more diverse and high-quality productions. The availability of these incentives has also allowed producers to invest in new talent, and experiment with innovative technologies, enriching the theatre experience for audiences.
The arrival of theatre tax credits in the UK has helped the profession develop and expand into new and innovative productions and contributed to the UK’s cultural landscape.
To be eligible for theatre tax credits your production must meet certain criteria, including being performed live, having a script or score, and being intended for public performance. Additionally, the production must demonstrate a significant level of artistic or cultural merit.
The relief is calculated based on eligible production costs. These costs include expenditures on salaries, set construction, costumes, props, and other production-related expenses. The exact amount of relief is determined by the ratio of core expenditure (costs directly related to the production) to total production expenditure.
At the time of writing, tax credit rates have been temporarily increased as part of the government’s covid recovery plans. For non-touring productions, the relief has increased from 25% to 45% of eligible expenditure. For touring productions, the temporary increase was from 35% to 50%. The government announced that the time limit for the increase rates has been extended to 31st March 2025.
Production companies can claim tax credits against their corporation tax liability. In some cases, where the production company is not liable for corporation tax, they may be able to surrender the tax credit in exchange for a cash payment.
If you believe your company may be eligible for these credits you need to act soon to maximise your claims and to ensure you will not miss out on the temporary increased rates.
