Theatre Tax Relief gives the company that produces a qualifying play, opera, musical, ballet or other dramatic production an extra deduction equal to the lower of 80% of total core expenditure and its UK core expenditure. If the production makes a loss after that deduction, the loss can be surrendered for a payable credit at 40%, or 45% for a touring production, for periods from 1 April 2025.

The relief is in Part 15C of the Corporation Tax Act 2009 and was introduced by Finance Act 2014 with effect from 1 September 2014. HMRC’s Theatre Tax Relief Manual (TTR) explains how it works in practice.

Which productions qualify for theatre tax relief?

A qualifying theatrical production is either a play, opera, musical or other dramatic piece that tells a story, where the performances are live and the performers play roles, or a ballet. In addition:

  • the main purpose of audience members must be to observe the performance;
  • all or a high proportion of the performances must be for paying members of the general public or provided for educational purposes;
  • from 1 April 2024, at least 10% of core costs must relate to activities in the UK. Before that date the test was that at least 25% of core costs were spent on goods or services from the UK or the European Economic Area.

A production is excluded if a main purpose is to advertise or promote goods or services, if the performances include a competition or contest, if a wild animal is used in any performance, if the production is of a sexual nature, if a main object is to make a relevant recording, or if it was produced for training purposes.

Who counts as the theatrical production company?

Under section 1217FC CTA 2009 there can be only one theatrical production company for each production. HMRC’s guidance at TTR10110 says the company must be responsible for producing, running and closing the production, be actively engaged in decision making through those phases, make an effective creative, technical and artistic contribution, and directly negotiate, contract and pay for rights, goods and services. It must employ or engage the performers.

Work can be subcontracted, but a company that commissions the whole show from someone else and simply holds the rights is not the production company. Where more than one company could qualify, it is the one most directly engaged. A company making a production in partnership cannot be the production company for that production, although collaborative co producers are not automatically partners.

What counts as core expenditure?

TTR50010 explains that core expenditure is spending on producing the production, exceptional running costs, and closing the production. Exceptional running costs can include a substantial recasting or set redesign after the first performance to the paying public.

Core expenditure does not include developing the production, ordinary running costs during the run, exploiting the production, or non producing activities such as financing, marketing, legal services and storage. Advertising and promotional material are not core. A script used to establish commercial viability is development, so that part of its cost is excluded. Non core costs still count in the taxable profit or loss of the production; they just do not attract the extra deduction.

How is the relief calculated?

Each production for which relief is claimed is treated as a separate theatrical trade, with its profits and losses calculated apart from the company’s other activities. Within that trade the company gets an additional deduction under section 1217J CTA 2009 equal to the lower of:

  • 80% of total core expenditure; and
  • actual UK core expenditure, meaning core expenditure on goods or services used or consumed in the UK.

So if non UK core costs are 20% or less of the total, they make no difference. HMRC’s example at TTR55020: £2m of core expenditure, all UK, gives an additional deduction of £1.6m; £4m of core expenditure with £2.5m UK gives £2.5m.

If the separate trade has a loss, the company may surrender all or part of its surrenderable loss for a theatre tax credit. The surrenderable loss is the lower of the available loss (the period’s loss plus unused losses brought forward) and the available qualifying expenditure (the additional deduction to date less amounts already surrendered).

What rates apply, and when does the touring rate apply?

From 1 April 2025 the credit rate is permanently 40% for non touring productions and 45% for touring productions, under changes made by Finance (No 2) Act 2024. Before that, productions entering production from 27 October 2021 had temporary rates of 45% and 50%. An accounting period that straddles 1 April 2025 is split into two notional periods, each calculated separately.

At TTR55031 HMRC explains that a production is touring only if, at the beginning of the producing phase, the company intends to present live performances in six or more separate premises, or in at least two separate premises with at least 14 performances in total. The status is fixed by that intention and is not changed by a later change of plan. If the company intended to tour but could not for reasons outside its control, it may still get the touring rate if it can evidence the intention, for example with contracts and venue bookings. Moving between floors of one building does not create separate premises.

What does a worked example look like?

Illustration only. A company produces a non touring play in one accounting period. Core expenditure is £500,000, all UK. It also spends £50,000 on marketing and other non core costs. Box office income is £300,000.

Item Amount
Income less all costs (£300,000 less £550,000) £250,000 loss
Additional deduction (80% of £500,000) £400,000
Loss after additional deduction £650,000
Surrenderable loss (lower of £650,000 and £400,000) £400,000
Theatre tax credit at 40% £160,000

The remaining £250,000 of loss stays within the theatrical trade. Had the play been a touring production, the credit would have been £180,000. This matches HMRC’s own summary at TTR55030 that a loss making company receives a credit of 32% of core expenditure for a non touring production (80% times 40%) and 36% for a touring production.

Can a charity or its trading subsidiary claim?

Yes. HMRC’s guidance at TTR70020 confirms that a not for profit company that qualifies as the production company can claim on the same basis as a commercial company, and the credit is calculated in the same way. Many charities use a wholly owned trading subsidiary. That subsidiary must genuinely be the production company; it is not enough for the charity to carry out the producing functions and use the subsidiary just to claim. The subsidiary can, however, subcontract activities back to the charity. HMRC recommends professional advice on charitable status and VAT.

How and when is a claim made?

Relief is claimed in the Company Tax Return. For returns submitted on or after 6 April 2026 the CT600P Creative Industries supplementary page must be included. An additional information form must be sent, giving for each production its title and start date, core costs split between UK or EEA and other costs, and a breakdown by category. Touring claims also need the dates and number of performances at each premises.

For accounting periods beginning on or after 1 April 2024, a claim can be made, amended or withdrawn up to two years after the end of the period of account it relates to; for earlier periods the limit was one year after the filing date. HMRC may accept late claims in some circumstances. See also accounting periods and periods of account.

What mistakes come up in theatre tax relief claims?

  • Including ordinary running costs, marketing or development costs as core expenditure.
  • Claiming the touring rate without evidence that touring was intended at the start of the producing phase.
  • Not keeping each production as a separate trade. Under section 1217MC, when a production closes its losses can be transferred to another theatre relief trade of the same company or a group company, rather than following the normal rules in company trading losses or terminal loss relief.
  • Deferring income or inflating costs to enlarge the loss, which HMRC’s anti avoidance rules counter.

For concerts see orchestra tax relief, and for exhibitions see museums and galleries exhibition tax relief.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.