Industry figures have welcomed confirmation of a major new UK theatre tax relief scheme by the government, describing it as a “monumental” development that could create millions of pounds of investment money.
Julian Bird, chief executive of industry body the Society of London Theatre, said it was an “amazing” announcement, which showed a huge vote of confidence in the live performance sector by the government.
He said: “Our desire is that this gives a boost to producing across theatre and other forms of performing arts such as dance and opera, and in particular that this helps regional theatre. There is an opportunity here to boost production, jobs and investment.”
“This is an amazing thing that has been announced today. It is potentially millions of pounds of direct investment into theatre production,” he added.
Chancellor George Osborne today confirmed that the initiative would come into effect this autumn.
The scheme will mean producers are able to claim up to a 25% tax rebate on 80% of a production’s up-front eligible budget costs ahead of its run.
Touring shows will receive a 25% relief, while other productions will be eligible for a 20% tax credit.
It will benefit both commercial and subsidised producers, because the relief will be claimed either by offsetting it against corporation tax – a levy on the taxable profits of an organisation – or as a cash credit.
The relief will be applied on a per-production basis to 80% of a show’s eligible capital expenditure – which includes all costs required to mount a show, apart from investment required for areas such as marketing, advertising and contingency funds.
Rachel Tackley, president of industry body UK Theatre, said: “This will have a serious positive impact on production budgets.”
“Commercial theatres will be able to compete with cinema and film producers in terms of getting investors and the not-for-profit sector – if they set up properly – will basically be able to get a cheque in the post,” said Tackley.
Tackley, who is also director of English Touring Theatre, said producing organisations that are charities would have to look at setting up a separate trading company to operate their productions in order to claim the relief.
She added: “This shouldn’t be problematic. UK Theatre will be running training courses on this and its something the Treasury and HMRC have been really open to and are going to be supportive of.”
Tackley said there would also be an impact on receiving houses, because the money not-for-profit producers saved on their production costs could be passed onto venues and their audiences.
Meanwhile, commercial producer Edward Snape, who is executive producer at Fiery Angel, described the announcement as “great news”.
He said it would help to incentivise producers to put on more shows and would create a boost to regional touring in particular, at a time when that part of the sector was struggling.
“This will also benefit the investor because their money will go further but it won’t be tax relief into their pocket – it is relief back to the production,” said Snape.
He added: “I don’t think from a commercial point of view that people will be spending more money on shows, it will be more of a case that the production is more viable and there is some relief to go back into recouping the production costs.
“In commercial theatre the aim of the game is to recoup your upfront costs and this will speed up that process to get it into profit more quickly.”
However Snape warned that while the scheme was a positive development for the industry as a whole, it was important to remember it could not be claimed against a production’s marketing costs.
“The most notable thing to be aware of from a commercial perspective is that marketing is exempt. Marketing can sometimes be 30 to 40% of the budget for commercial producers so it’s quite a big chunk,” he said.
Publication of a consultation on the relief scheme is expected on Monday.