“Graham explained very clearly what was needed and then delivered exactly as he said he would. Graham prepared the computations and submitted the claims on our behalf and we didn’t have to deal with HMRC at all. This was the easiest piece of tax work that we have ever had to do”

Matthew Quirk of The Merry Opera Company

What is TTR?

TTR is a scheme introduced to support and encourage the creation of theatrical productions.

It was introduced on the 1^st September 2014 (see Finance Act 2014 (see link)) and can be claimed by companies that produce qualifying  productions.

TTR is based on the Film Tax Relief scheme introduced in 2007 and subsequently extended to other creative industries including TV, Animation, Video Games, Orchestra and Museums and Galleries.

TTR is processed through the Corporation Tax system and is available to incorporated companies, commercial and charitable, that produce qualifying theatrical productions. 

How does TTR work? 

TTR works by enhancing expenditure incurred in the production process and creates an additional deduction to be set against the profit or loss (or surplus or deficit in respect of charitable companies) of each production.  

For commercial companies, the additional deduction reduces the profits assessable for Corporation Tax and, where it extends or creates a loss, allows that loss to be surrendered to HMRC for a payable tax credit.

For charitable companies, the additional deduction reduces the surplus already exempt from Corporation Tax and, where it creates or extends a deficit or loss, allows this to be surrendered to HMRC for a payable tax credit.  

Who qualifies?

Theatre companies constituted as a:

• company limited by shares
• company limited by guarantee
• Charitable Incorporated Organisation (CIO)
• Scottish Charitable Incorporated Organisation (SCIO)
• Community Interest Company (CIC)
  
  

all fall under the Company Tax regime and, even if they do not currently file Company Tax Returns, can claim TTR if they produce qualifying theatrical productions.

Unfortunately, if the theatre company is an unincorporated association (UA) or a trust then they are currently unable to claim TTR.

If the UA or trust wishes to claim TTR then it must either set up a separate production company or alternatively, change its structure.

One increasingly popular option is for a charitable UA to convert to a CIO or SCIO.

This is a decision for the theatre company and HMRC has no issue with either option.

Which theatrical productions qualify?

A production qualifies for TTR if it is a theatrical production that is a dramatic production or a traditional ballet.

This means a production of a play, an opera, a ballet, a musical or other dramatic piece in relation to which:

• the actors, singers, dancers or other performers are to give their performances wholly or mainly through the playing of roles
• each performance in the proposed run of performances is to be live
• the presentation of live performances is the main or one of the main objects of the company’s activities in relation to the production.
  
  

The production must also meet what is called the commercial purpose condition.

That is that the production company intends that all or a high proportion of the live performances will be to either:

• to paying members of the general  public or
• provided for educational purposes.
  
  

Which expenditure qualifies for enhancement?

Expenditure qualifying for enhancement is called Core expenditure and includes expenditure incurred on:

• producing the production
• exceptional running costs and
• closing the production.
  
  

For example, the costs of the set, costumes, répétiteur, script, the actor’s wages through the rehearsal phase are all enhanceable costs.

Non-qualifying or non-core expenditure include costs relating to:

• Marketing
• Financing
• Legal services
• Storage
• Ordinary running costs.
  
  

Where expenditure falls across the various phases of production then it will need to be apportioned on a just and reasonable basis.

How is TTR claimed?

TTR is claimed through the Company Tax system which means that claims must be made within a Company Tax Return or an amendment to a Company Tax Return.

Claims must include computations in respect of all qualifying productions and detail the income received and the expenditure incurred.

The expenditure should be split between core and non-core and information should be provided of any apportionments used.  

As specialists in Theatre Tax Relief, we are here to help you achieve the maximum benefit available whilst making the process as simple as possible. 

 To download our factsheet on Theatre Tax Relief – click here