Commercial producers and Arts Council England are lobbying the government to introduce US-style tax relief that would allow theatre investors to write off losses against income tax.
The Treasury has just finished consulting on proposals aimed at extending tax benefits on investment by business angels for small and start-up businesses across all sectors. However, in its response, ACE has called on the government to launch a separate review looking specifically at tax breaks for all the creative industries â€“ including theatre â€“ claiming there is a need for “a detailed review of the evidence base on the different forms, levels and instruments in this sector.”
ACE also encourages the government to introduce “additional tax incentives making investment in high-risk enterprises more attractive for investors”. It adds: “In the USA, for example, theatre investment losses can be written off against tax.”
The arts council’s director of theatre, Barbara Matthews, told The Stage: “We’re sort of saying ‘thank you for giving us the opportunity to respond to this, it might be useful occasionally, but we’d really like to have a different conversation’.”
This response was supported by Society of London Theatre president and independent theatre producer Mark Rubinstein, who stressed that, while the reform to Enterprise Investment Scheme and Venture Capital Trusts being suggested by the Treasury might be useful on some occasions, it is generally not suited to theatre investment. This is because money has to be invested for a minimum of three years, meaning that it is not appropriate for individual theatre productions, although it has been used by companies such as Fiery Dragons and Old Vic Productions for investment across multiple projects. Instead, Rubinstein called on the government to consider sector-specific tax breaks for theatre, in the way it has done for the film industry.
He said: “For very little money from the Treasury, they could do something that would have a real impact. At a time when the government is supportive of venture capital adding to the various ways we see the arts in this country financed, it would be a really smart thing for them to do, I believe.
“We’re seeing an economy that is not in its strongest place, but we’re also seeing theatregoing continue to do very well. And that is great, but raising investment for shows is hard and it’s going to be hard while the economy is in that state. Providing extra support and avenues that will encourage people to invest in theatre has got to be a good thing.”
The West End has long lobbied for improved tax conditions for theatre investment, without success. But Rubinstein said he felt the current government “is as receptive to this as it has ever been, if not more so, therefore there’s an opportunity to really push for it now.”
The Treasury’s consultation on its proposals to create a new cross-sector investment scheme called the Business Angel Seed Investment Scheme has now closed. The government plans to publish draft plans in the autumn as part of its Finance Bill 2012, when it will again call for feedback.