TTR55050 - Calculation: additional deduction – multi-period production
S1217J Corporation Tax Act 2009
Where the phases of production of a theatrical production cover more than one period of account, Theatre Tax Relief (TTR) operates on a cumulative basis. This means that:
- in the first period of account the Theatrical Production Company's (TPC's) additional deduction is determined by the amount of core expenditure incurred within that period
- in subsequent periods of account, including the completion period, the additional deduction is calculated by reference to total core expenditure incurred to date less the total amount of additional deductions given for previous periods.
Example: production continues for multiple periods
A TPC makes a qualifying production with total core expenditure of £1m, of which 75% is UK expenditure and 25% is non-UK expenditure. The phases of production span three accounting periods. The separate theatrical trade ceases at the end of the third accounting period.
Expenditure on the production is eligible for TTR. Over the three periods of account, the profile of core expenditure is:
- |
UK core (£k) |
Non-UK core (£k) |
Total cumulative core (£k) |
|---|---|---|---|
First period |
350 |
0 |
350 |
Second period |
350 |
100 |
800 |
Third period |
50 |
150 |
1,000 |
Total expenditure |
750 |
250 |
1,000 |
First period
In the first period of account, because all the core expenditure is UK expenditure, the additional deduction is calculated on the basis of 80% of the total core expenditure (80% x £350k). The additional deduction for the first period is therefore £280k.
Second period
At the end of the second period of account, the total core expenditure to date is £800k, of which £700k is UK expenditure.
Because UK core expenditure is greater than 80% of total core expenditure (80% x £800k = £640k), the additional deduction is calculated by reference to 80% of the total core expenditure incurred to date (80% x £800k) less the additional deduction for the first period (£280k).
The additional deduction for the second period is therefore £360k (£640k - £280k).
Third period (completion period)
At the end of the third period of account, the completion period, total core expenditure is £1m, of which £750k is UK expenditure.
Because UK core expenditure is less than 80% of total core expenditure (80% x £1m = £800k), the additional deduction is calculated by reference to UK expenditure incurred to date (£750k) less the total amount of additional deductions given for the earlier periods (£280k + £360k = £640k).
The additional deduction for the third period, the completion period, is therefore £110k (£750k - £640k).
Cumulative effect
The cumulative effect at the end of the three periods of account is that TTR is provided on the 75% of total core expenditure that was also UK expenditure.
Summary
- |
Period 1 |
Period 2 |
Period 3 |
|---|---|---|---|
UK core expenditure (cumulative) |
£350k |
£700k |
£750k |
Non-UK core expenditure (cumulative) |
£nil |
£100k |
£250k |
Total core expenditure (cumulative) |
£350k |
£800k |
£1m |
UK expenditure as % of total core expenditure |
100% |
87.5% |
75% |
Additional deduction to end of period |
£280k |
£640k |
£750k |
Less additional deduction claimed for earlier period(s) |
(£280k) |
(£640k) |
- |
Additional deduction due for the period |
£280k |
£360k |
£110k |
European expenditure
Prior to 1 April 2024, European expenditure was used instead of UK expenditure. Please see TTR50050 and TTR50090 for details.