Understanding Eligible Expenses for Theatre Tax Relief

Are you claiming all eligible expenses for Theatre Tax Relief?

Theatre Tax Relief (TTR) is a valuable incentive that allows theatrical production companies to claim a portion of their qualifying expenses as a tax credit.

Since its introduction in 2014, over 20,000 businesses have successfully claimed Theatre Tax Relief, with £645 million paid out. It’s been pivotal in financially supporting theatrical productions across the UK.

However, many companies miss out on their full entitlement due to misunderstandings about eligible expenses. If you are looking to claim Theatre Tax Relief, it’s important to know how to maximise it.

Eligible Core Expenditure for Theatre Tax Relief

Firstly, it’s important to understand that HMRC defines four phases of production and uses these phases to help determine what expenses are eligible. In general, only expenses incurred during the Production and Closing phases can be included in your claim.

Development:
The speculative phase where initial research, planning, and decision-making occur to determine whether a production will proceed.
Production:
Begins when a production is officially confirmed (‘green-lit’) and runs up until the first public performance.
Running:
The period when performances have started and are being shown to the public.
Closing:
The final phase of closing the production and removing the sets.

Key eligible core expenditures that can typically be included in your tax relief claim:

Producing the production:

Rehearsal expenses: Costs incurred during rehearsals, including venue hire, equipment, and materials.
Cast and crew wages: Salaries and wages for performers, directors, designers, and other production staff directly involved in producing the performance.
Set and costume design: Expenses related to the design, construction, and purchase of sets, costumes, and props.

Exceptional running costs:

Cast and set: Substantial recasting or a substantial redesign of the set

Closing the production:

Final Phase: Core costs related to the final phase when closing the production.
Production Sets: The costs at the end of the performance related to when sets are struck, put into storage, sold, or broken up.

Expenses Not Eligible for Theatre Tax Relief

While certain expenses can be claimed under Theatre Tax Relief, it’s equally important to understand which costs cannot be included in your claim.

This list is not comprehensive, but it highlights some of the costs that cannot be deducted as part of your claim. Here’s what’s not eligible:

Completion bond and other forms of insurance: Completion bonds protect against the risk that a production may not be completed. The costs of a completion bond aren’t eligible for TTR since they aren’t incurred on theatre production activities. Costs related to other forms of insurance, more directly related to the theatre production activity itself, may qualify.

Running costs: Expenses related to the ordinary running of the production on or after the first performance are not considered core expenditures. Some “exceptional running costs” may qualify.

Entertaining: Hospitality and entertainment costs are not allowed under normal rules.

Publicity and promotion: Marketing-related costs do not qualify for TTR since they do not relate to the making of the production.

Audit and accountancy fees: You can’t deduct audit fees. Accountancy fees may qualify for TTR if the accounting activities directly relate to producing the production.

Storage costs: Expenditure related to storing costumes, sets, or other material does not qualify.

Bank interest and charges: Generally, bank interest is not eligible; however, some bank charges may qualify if they are incurred from activities directly tied to the costs of production.

Definition of a Theatrical Production

To qualify for Theatre Tax Relief, a production must meet specific criteria. The primary purpose of the audience must be to observe the performance. Productions that are primarily for training or promotional activities will no longer be eligible.

What is the TTR rate?

The tax reduction available through Theatre Tax Relief (TTR) can be substantial for qualifying theatre productions.

Starting from 1 April 2025, the rates for TTR will be permanently set at:

40% for non-touring productions
45% for touring productions, including all orchestra productions.

To be considered as touring at least one of the following must apply:

You plan performances at 6 or more separate premises
At least 14 performances are held in at least two separate premises

For a more detailed explanation, refer to our Quick Guide to Theatre Tax Relief.

Accounting for the Expenses

To maximise your claim and stay compliant, it is essential to have a reliable system for tracking and categorising expenses accurately. At Atek, we help theatre companies implement effective accounting strategies to capture qualifying costs correctly.

The rules governing TTR are highly specific, covering both the types of expenses and the phase of production in which they are incurred. Additionally, only UK-based expenditures qualify.

When claiming TTR, you must submit the relevant information within your theatre production company’s corporation tax return. This includes:

Eligible Expenditures – You must keep detailed records of qualifying core expenditure.
Profit and Loss Accounts – You need separate statements for each production.
CT600P Supplementary Page – This must be submitted with your Company Tax Return (CT600) to claim the relief.
Additional Information Form – HMRC requires a breakdown of core expenditure, showing:
- The title and start date of the production.
- The proportion of expenditure.
- Categorised costs.

TTR claims can be made up to two years after the end of the period the claim relates to. It is essential to keep accurate records and ensure claims are submitted within the deadline to avoid missing out on tax relief.

Maximise Your Theatre Tax Relief With Atek

If you are not claiming this relief, we can help you determine if you qualify. We will work with you to optimise your claim and ensure you are compliant.

The criteria are very specific but can have a significant impact on your financials if you are able to claim. For more information, see our Quick Guide to Theatre Tax Relief and contact us for more detailed guidance.