A new tax relief for the costs of producing orchestral concerts is now available for trading companies as well as charitable companies.
Where the claimant is a trading company, the relief can be taken as an additional tax deduction if profitable or as a 25% tax credit if loss making. Where the claimant is a trading company of a charity, it is more likely that the tax credit will be sought.
Like all tax credits there are a number of requirements that need to be met. The main ones are:
- it can apply to orchestras, ensembles, groups and bands with at least 12 instruments, most of which are not electronically amplified;
- at least 25% of the core expenditure on the relevant concert or series of concerts is on goods or services from within the European Economic Area (EEA);
- the instrumentalists must generally be the primary focus of the concert;
- the concert must not have a main purpose of advertising goods or services or making a recording;
- the concert must not include a competition or contest;
- the orchestral company must also be actively involved in the decision-making process and be responsible for putting on the concert.
If applicable, the additional deduction available for any accounting period is calculated by taking the lower of:
(i) the amount of qualifying expenditure incurred up to the end of that period which was incurred in the EEA, and
(ii) 80% of total qualifying expenditure incurred to date.
This amount is then reduced by the amount of additional deductions claimed in previous periods.
The tax credit arises where the company or charity has a surrenderable loss. Broadly, the surrenderable loss is the lower of the loss for the period, so far as relating to the concert or series of concerts concerned, and the qualifying expenditure for the period. The tax credit is equal to 25% of the loss surrendered.
If you would like further specialist advice on this matter, our dedicated Culture, Entertainment and Media team
will be able to assist you.