Orchestra Tax Relief
Who can qualify for Orchestra Tax Relief?
In order to qualify the company must be involved with decision-making and directly negotiate contracts and pay for rights, goods and services including employing or engaging with performers. It must also be involved throughout development from pre-production until completion.
The production must also:
- Be a live performance where it is performed by a orchestra, ensemble, group or band
- Be intended for the paying public or educational purposes
- Be performed by at least 12 instrumentalists
- Be consisted of a majority of instruments that are not electronically amplified
- At least 25% of the core costs must relate to activities within the United Kingdom or European Economic Area (this applies post-brexit, however legislation may change in the future)
Orchestra Tax Relief is not available where:
- The main purpose is an advertisement or promotional program
- One of the main objects is to make a recording
- The performance includes a competition
How much can you claim?
Qualifying companies can claim an additional deduction on their Corporation Tax Return which will reduce their profits or increase any loss thereby reducing their Corporation Tax liability. As an alternative they can surrender a loss in return for a repayable tax credit.
The additional deduction will be the lower of:
- 80% of the total core expenditure
- the amount of core expenditure in the United Kingdom or European Economic Area
Essentially, core expenditure is expenditure incurred on pre-production, principal photography and post-production. It excludes expenditure on development, distribution or other nonproduction activities.
If the company is shown to make a loss after applying the additional deduction on it’s Corporation Tax Return, all or part of the loss can be surrendered in return for a repayable tax credit at a rate of 50%.
The claim should be made within one year of the company’s filing date and can be amended or withdrawn within that period.
In March 2023, it was announced in the Spring Budget that the higher rate relief of 50% will be extended to April 2025 and then tapered down to 25% from April 2026 onwards.
Working examples for Orchestra Tax Relief
The City Of Birmingham Symphony Orchestra puts on a production of the works of Tchaikovsky. It is intended to be performed for the paying public. It generates income of £550,000 in their current financial year and as part of putting on the production it has total costs of £120,000.
Of the £120,000 in costs during the financial year it has a qualifying core expenditure of £80,000(1) .
Of the same £120,000 in costs during the financial year it has qualifying core expenditure of £80,000(2) which was spent within the UK/EEA region.
Corporation Tax filing would be as follows if Orchestra Tax Relief was not applied:
Income: £ 550,000
Expenditure: £ 120,000
---------------
Profit/Loss: £ 430,000
Corporation Tax Liability: £ 112,500
(£530,000 x 25%)
Corporation Tax filing would be as follows if Orchestra Tax Relief was applied:
Income: £ 550,000
Expenditure: £ 120,000
Additional Deduction: £ 64,000
(lesser of (1) 80% of £80,000 and (2) £80,000)
---------------
Profit/Loss: £ 366,000
Corporation Tax Liability: £ 91,500
(£350,000 x 25%)
Should the orchestra production company apply Orchestra Tax Relief, instead of the company paying a Corporation Tax bill of £112,500 it would only pay £91,500, saving themselves £21,000 which they could potentially invest in other projects.
Next Steps
If you or your organisation have a potential claim for tax relief, or would like further information about the process you can get in touch with us to arrange a no obligation meeting either by phone or in person.
Make An Orchestra Tax Relief Enquiry
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