Please note that this article relates to the proposals for Orchestra Tax Relief in the original consultation which closed on 5 March 2015. Please see our updated guide Orchestra Tax Relief for the results of the consultation and amended proposals.
The government is consulting on the introduction of a new tax relief for orchestra production companies: it is proposed that this will be similar to Theatre Tax Relief.
Key features of orchestra tax relief
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Qualifying companies must be engaged in the production of live orchestral performances
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Tax relief will be in respect of the creative and production costs incurred in producing live orchestral performances
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A higher rate of tax credit will apply to touring performances.
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It will be possible for orchestras to group together multiple qualifying performances in one tax relief claim
How much relief?
Qualifying companies can claim either:
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- An additional tax deduction (the enhancement) of 100% of expenditure (the lesser of UK qualifying expenditure or 80% of total qualifying expenditure), or
- where after claiming enhanced deduction of expenditure the company makes a loss it may surrender the lower of that loss or the qualifying enhanced expenditure and be repaid a tax credit claim amounting to 25% of the loss for a touring production, or 20% of the loss for non-touring production
The maximum relief available per company is £50 million, and the maximum aid intensity should not exceed 100% of eligible costs.
To qualify, the majority of performances for which relief is being claimed must be played by a musical ensemble consisting of 14 or more performers and must include players drawn from each of the following four sections: string instruments, woodwind instruments, brass instruments and percussion instruments.
Proposed exclusions:
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entertainment with a competitive element
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performances where the sole or main purpose is for advertising
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performances intended solely or mainly for recording or broadcast
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performances of certain genres of non-orchestral music, such as pop and rock
Where a company claims orchestra tax relief, it will not be able to claim relief under another tax credit scheme such as film tax relief, theatre tax relief or the research and development tax credit.
Any amount of costs incurred but unpaid within four months of the end of a period of account will not qualify for the tax relief for that period.
Qualifying companies
The company must be within the charge to UK tax and directly involved in the development of an orchestra's performance, as in responsible for creating and developing the content of the performance and actively involved in the decision making process to deliver it.
Charities will be able to access orchestra tax relief on the same basis as any other production company: they may claim the repayable credit. Some orchestras may choose to use a wholly owned trading subsidiary in order to claim tax relief.
Qualifying expenditure
The company's expenditure must be directly incurred in the creation and development of an orchestral performance and must be integral to the creative process.
The list below sets out some examples of the eligible and ineligible costs. In line with other creative sector tax reliefs, indirect expenditure, such as the costs of marketing or financing, will not be eligible for tax relief. In addition, speculative expenditure and ordinary running costs will be excluded from relief.
Qualifying expenditure can be incurred in any country, although at least 25% of the core expenditure must be incurred in the European Economic Area.
Examples of core expenditure
Qualifying ‘core’ expenditure:
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player and artist fees
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rehearsal costs
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venue hire for rehearsals
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hire or commissioning of musical scores
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relevant travel and subsistence within the UK
Ineligible costs:
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cost of financing
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fees, including legal and accounting fees
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administration
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marketing and advertising
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overseas travel and subsistence
Consultation on the proposed relief closes on 5 March 2015.
Please see our updated guide Orchestra Tax Relief for the results of the consultation and amended proposals.