The Stage

SOLT calls for West End film-style tax breaks

Published Thursday 30 September 2004 at 12:05 by Ruth Gillespie

President of the Society of London Theatre Stephen Waley-Cohen has called on the government to provide tax breaks to commercial theatre producers in line with those recently awarded to the British film industry.

Speaking at a function hosted by Conservative Party leader Michael Howard, Waley-Cohen called on the current government or any potential administration to consider extending concessions to the theatre industry.

He said: “If the government can help film production in this way then it can help us. We are just as important to the country’s economy and I ask that a similar scheme be introduced for the theatre. There might be a smaller upper limit - after all, stage productions cost less than films - but I do not believe the total expenditure from the government would be very large. And, if it leads to a more vibrant theatre industry, that will be beneficial to the economy as a whole.”

Details of the new scheme - which will enable film companies to claim back up to £4 million in tax relief on a British production - were announced earlier this month by the Treasury.

From July 2005, when the current Section 48 tax incentive expires, producers will be entitled to receive up to 20% of their total costs on budgets of up to £20 million - an increase on the present system, which allows them to claim up to 15% on a maximum budget of £15 million.

The latest move is designed to provide added incentive for investors and to ensure the country continues to turn out low-budget hits such as The Full Monty, Calendar Girls, Bend It Like Beckham and 28 Days Later.

Arts Council England’s Economic Impact Study of UK Theatre, published in May, showed that British theatre generates more than £2.6 billion a year towards the general economy. It estimated that while West End venues put £1.5 billion back into the economy, regional theatres also have a significant role by generating at least £1.1 billion through visitor spending and expenditure on local goods and services.

Waley-Cohen, a former financial journalist, who operates the Savoy, Victoria Palace and St Martin’s theatres, went on to call for a simplification of the tax returns process for individuals investing in commercial theatre productions. At present, if an investor contributes to a production and makes a loss, that amount can usually be set against other income or gains and used to reduce tax. However, the process is criticised as complicated and slow and could deter potential investors.

Waley-Cohen said: “I would ask that, as in the USA, investment in a production could be immediately set against tax and then, when the investment is returned and if or when a profit is made, that return and that profit is subject to tax.

“Individuals used to invest a lot here but it has got more difficult to persuade them to do so in later years. This is mainly a question of simplifying and speeding up the system to encourage investment and should cost the government very little.”