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Orchestra tax credit

The Orchestra’s tax credit is intended to apply to expenditure after 1 April 2016, but the actual legislation has not yet been enacted and is likely to be finalised in the autumn of 2016. The Government want to reverse the fall in income from ticket sales and hires – which it’s figures show fell by 11% between 2009-10 and 2012-13, and to encourage the UK’s 175 orchestra’s to perform across the whole country.

The orchestra’s tax credit will operate on a similar basis to other creative tax credits, with an additional deduction, or ‘enhancement,’ of UK qualifying expenditure up to 80% of total qualifying expenditure. To the extent that this results in a loss, it can be surrendered for a ‘payable tax credit’ at the rate of 25%.

Key features of the proposed relief include:

  • Qualifying companies must be engaged in the production of live orchestral performances
  • Tax relief will be in respect of the creative and production costs incurred in producing live orchestral performances
  • Minimum 25% of core expenditure must be incurred in EEA countries.

Notable exclusions include:

  • entertainment with a competitive element
  • performances where the sole or main purpose is for advertising
  • performances intended solely or mainly for recording or broadcast

Enhanceable expenditure:

The lesser of

  • EEA qualifying expenditure
  • 80% of total qualifying expenditure

Maximum claims

Qualifying companies can claim either:

  • an additional tax deduction (the enhancement) of 100% of  enhanceable expenditure
  • if a loss is surrendered: 25% of the loss up to the amount of enhanceable expenditure
    • Qualifying concert – at least 12 instrumentalists, none or minimal are electric
    • Performed in front of public
    • Series of concerts – elect to an officer of HMRC in writing
    • At least 25% of core expenditure needs to be spent on EEA expenditure
    • Excluded from core expenditure:
      • expenditure on any matters not directly involved with putting on the concert or concerts (for instance, financing, marketing, legal services or storage),
      • speculative expenditure on activities not involved with putting on the concert or concerts,
      • expenditure on the actual performance or performances (for instance, payments to musicians for their performances in the concert or concert series).
    • Max payable is 50m Euros per year
    • The performance must be for paying public or educational purposes
    • Charities will not be excluded from this relief

Please speak to your usual Shipleys contact or one of our experts to determine what you need to do next. Specific advice should be obtained before taking action, or refraining from taking action, on the basis of this information.

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