Tax benefits to be widened

Fears that proposals for a new tax relief for theatre productions might only benefit larger commercial arts organisations have been largely allayed with the publication of a report by HM Treasury in response to issues raised during a consultation with the sector earlier this year. The proposed approach to applying the relief was based on existing creative sector tax reliefs for film, animation, video games and television, but many in the arts sector raised concerns about how this would work for production companies, particularly smaller ones with charitable status, and the potential administrative burden the relief could create. Also under fire was the suggestion that only performances taking place in licensed venues would be eligible for relief, and a definition of theatre that did not appear to cover performing art forms such as circus, music or comedy. The proposed definition of touring was also a problem, requiring more performances per venue, or performances in a larger number of separate venues, than would be usual for smaller companies.

Sixty-three responses were submitted to the consultation by small, medium and large production companies, individuals and representative bodies in both the commercial and not-for-profit sectors. Views were also gathered at a number of roundtable discussions. The resulting report states: “The government recognises that not for profit companies make up a valuable and substantial part of the theatre industry and should be able to benefit from the new tax relief without incurring significant burdens.” The requirement to perform in a licensed venue has been lifted to allow for performances in temporary or outdoor venues to qualify for the relief, and an eligible production will now qualify as ‘touring’ if there is an intention to perform at six or more premises (reduced from 12) or if presenting 14 performances in two or more premises. The location of the tour is not restricted and includes international venues, as the Government hopes this “will encourage companies to showcase the UK’s talent around the world”. The performances that will be eligible to benefit are those where performers are “wholly or mainly” playing a role and where “each performance is live, and the presentation of live performances is the main object, or one of the main objects of the theatre production company’s activities” – a definition that the Government believes is more appropriate for identifying eligible arts activity than naming specific artforms. HMRC intends to publish comprehensive guidance on the new regime to explain the relief.