OTR79110 - Orchestra Tax Relief: calculation: surrenderable losses and Orchestra tax credit: example

The following example illustrates how an Orchestral Production Company (OPC) that sustains a surrenderable loss can surrender that loss in return for an Orchestra Tax Credit (OTC). 

Example

An OPC undertakes a qualifying series with total core expenditure of £1m, all of which is UK expenditure.  The production was commissioned by a producer who pays £900k for it. 

Income

£900k

Expenditure

(£1m)

Trading loss before Orchestra Tax Relief (OTR)

(£100k)

Orchestra Tax Relief - additional deduction
(80% x £1m total core expenditure)

(£800k)

Trading loss after OTR

(£900k)

The surrenderable loss is the lesser of:

  • the £900k trading loss after OTR, and
  • the £800k additional deduction.

In this case the OPC can surrender up to £800k and chooses to surrender the full amount.  An OPC is not obliged to surrender the entire loss, but it will most likely do so.

Assuming the rate from 1 April 2025 applies (OTR10070), the amount of OTC due is therefore £360k (45% x £800k loss surrendered).

In this example the OTC is equal to 36% of the total core expenditure.