Theatres urged to act on valuable tax break

TAX: Performance groups told not to miss out on relief introduced to boost UK cultural scene

Theatres need to make sure they don’t miss out on valuable tax breaks.

Theatres benefited from £77 million of tax relief in 2017/18, up from £44m the year before – a 75% increase.

Official statistics just released by the UK Government show there were 910 claims made in 2017/18, representing 2,980 productions.

Of this, 1,140 were touring and 1,840 were non-touring shows.

Introduced in September 2014, theatre tax relief was designed to recognise the unique cultural value theatres brings to the UK and to encourage greater and more diverse productions by providing a tax break for companies who create qualifying work.

The relief follows similar schemes for other media such as film, television and video games.

Since 2014 a total of £137m has been paid out in relief, covering 1,670 claims and 4,680 productions.

However, some theatres are still not making claims because they don’t think they qualify.

HMRC have tried to create a simple process for claiming the relief, but there is still uncertainty and misunderstanding of the relief and who qualifies.

In order to be eligible to make a claim, a theatre must be a production company, so individuals, trusts, partnerships, or unincorporated associations don’t qualify.

Charities often think that they will not be able to claim the relief because they don’t pay corporation tax.

However, charities are within the charge to corporation tax, but most of their income will be exempt.

This misinterpretation of the relief is a key reason why some organisations are missing out on the tax relief.

Therefore, if you are an SCIO (Scottish Charitable Incorporated Organisation) or a charity that is limited by guarantee, you will also be able to make a claim.

There are four stages to putting on a production, but only the costs relating to the production and the striking of the set will qualify for the theatre tax relief.

The costs the theatre have incurred in pre-production will not qualify.

Also, it’s only the direct costs relating to production and the striking of the set that will qualify for the relief. Indirect costs do not qualify.

The claim itself forms part of the corporation tax return, although a separate profit and loss account must be prepared for each show.

The success of this tax relief has largely been due to the fact it is a simplified version of the film tax relief, so claims can be made with the minimum of red tape.

The relief has allowed some productions to proceed that otherwise may not have gone ahead or would have done so on a smaller scale.

Also, it’s worth noting theatres can claim back for productions dating back two years – so, some 2016 claims may still be in time.

When public funding continues to be under increasing pressure it is imperative that theatres do not miss out on the cash that might be due to them.

Some theatres are still not making claims because they don’t think they qualify HAZEL PRATT

Picture: Kim Cessford. Theatres are being urged to make sure they don’t miss out on valuable tax breaks.