Technical clarifications of the rules for cultural tax reliefs
Updated 22 November 2023
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This publication is available at https://www.gov.uk/government/publications/clarifications-of-the-rules-for-cultural-tax-reliefs/technical-clarifications-of-the-rules-for-cultural-tax-reliefs
Who is likely to be affected
Companies claiming tax relief for theatrical productions, orchestral concerts and museum and gallery exhibitions.
General description of the measure
At Spring Budget 2023, the government extended the temporary higher rates of relief of three Corporation Tax reliefs that are collectively referred to as the ‘cultural reliefs’:
- Theatre Tax Relief (TTR)
- Orchestra Tax Relief (OTR)
- Museums and Galleries Exhibition Tax Relief (MGETR)
Alongside these changes, the government is taking the opportunity to clarify some of the relief rules, including what is eligible for relief.
Policy objective
The aim of this measure is to provide clarity to the industry and ensure the fairness and success of the cultural reliefs.
Background to the measure
The TTR was introduced by Finance Act 2014, with an effective date from 1 September 2014, OTR by Finance Act 2016, with an effective date from 1 April 2016, and MGETR by Finance (No. 2) Act 2017, with an effective date from 1 April 2017.
Rates for these cultural reliefs were temporarily increased from 27 October 2021 to help the sector in their economic recovery from COVID-19. At that time, the government also introduced a series of legislative clarifications to help make the policy intent of the reliefs clearer.
At Spring Budget 2023, the temporary higher rates were extended for a further two years.
Detailed proposal
Operative date
This measure will take effect from 1 April 2024.
Current law
The current law is contained in Parts, 15C, 15D and 15E of the Corporation Tax Act 2009 contain the rules for companies claiming TTR, OTR and MGETR.
Proposed revisions
Legislative changes will be made to:
- clarify the exclusion of capital expenditure for TTR and OTR
- clarify the exclusion of costs incidental to production for TTR, OTR and MGETR
- exclude productions from TTR where the main focus is not observing the performance
- clarify the ‘playing of roles’ condition in section 1217FA for TTR
- amend the time limit for concert series elections to either the date of the first concert in the series or the date of the OTR claim relating to the first concert in the series, whichever is later
- require physical admission to exhibitions for MGETR
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| — | — | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure has no impact on individuals as it only affects businesses.
Equalities impacts
It is not anticipated that there will be impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
These measures are expected to have a negligible impact on a small number of businesses incorrectly claiming the creative tax reliefs. The aim is to clarify the relief rules and make it clear what is eligible for relief. One-off costs will include familiarisation with the clarifications. There is not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as it does not alter how businesses would interact with HMRC.
These measures are not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
HMRC operational impacts for this change are expected to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measures will be monitored through information collected from tax returns.
Further advice
If you have any questions about this change, please contact Kerry Pope at kerry.pope@hmrc.gov.uk, or Stephanie Martinez at stephanie.martinez@hmrc.gov.uk.