Creative industry reliefs for charities – are you claiming all you can

HMRC have released the latest figures on the amounts claimed under the creative industry schemes. The creative industry schemes provide relief through tax credits in the film, TV, Orchestra, Theatre and museums and galleries industries. The relief works by giving an additional tax credit, based on the amount of relevant expenditure, against the tax liability of the company hosting the event.

If there is no tax liability then the company can claim a refund of the credit in cash. Of particular importance to charities are the Orchestra, Theatre and Museums and Galleries tax relief schemes. Whereas Orchestra and Theatre reliefs are available to all companies, Museums and Galleries tax relief is only available to charitable companies, charity subsidiaries or local authorities.

The latest statistics collected by HMRC cover the 2021 to 2022 tax year have been released. It will come as no surprise to anyone that the COVID-19 lockdowns have had a significant impact on the turnover and productions of theatres, museums, galleries and orchestras – and this is reflected in the statistics when compared to the amounts claimed in the previous periods. The full report can be found here.

A comparison of the amounts claimed in the previous two years and the clear impact of the lockdown per relief claimed is illustrated in the tables below;

Theatre tax relief

Total Number
of productions
Number changeAmount of relief paid £m
2020-213,700115, 3.2%75
2021-222,055(1,645), 44.5%38

Orchestra tax relief

Total Number
of productions
Number changeAmount of relief paid £m
2020-21750155, 26%11
2021-22510(240), 32%10

Museums and Galleries Exhibition tax relief

Total Number
of productions
Number changeAmount of relief paid £m
2020-211,575520, 49.3%14
2021-221,060(515), (32.7%)9

To boost the support available to the creative sector the rates were substantially increased across all schemes for claims made between 27 October 2021 until 31 March 2023. This is a welcome bonus for the sector and should boost the value of claims made in this period.

However, concern remains that the creative and charity sector are not claiming all they can from this relief. COVID aside, there are several good reasons for this.

Firstly, the relief can only be claimed by companies within the charge to corporation tax. This has led many charity trustees and advisors to assume that the relief is not available for charities which do not pay corporation tax or make regular tax returns. However, this is incorrect and any charitable company is within the charge to corporation tax and so could qualify.

All reliefs are available to both charitable companies and their trading subsidiaries, the main issue being that the company making the claim must meet the tests regarding the production, decision making and running of the performance or exhibition.

Secondly, these are not straightforward claims to make. The performances and exhibitions on which claims are based must meet qualifying criteria regarding the content, duration, access and purpose of the show. All the relevant criteria must be satisfied for a claim, and it can feel daunting to ensure the claim satisfies these.

In addition, the claims require an analysis of the income and expenditure, per event, that often does not correlate easily with the management accounting of many organisations. Only certain direct costs are allowed and there are specific methodologies for the allocation of overheads. These calculations therefore cannot be easily lifted from the management or statutory accounts and need to be undertaken as a separate exercise.

All of which means that for many charities and their subsidiaries, these claims can feel difficult to make and potentially risky. For smaller charities the additional expertise required, and time required from the finance function, may be hard to find, and it may be uncertain whether the additional resources required to make these claims is worth the investment and the increased risk of an erroneous claim.

However, negotiating the requirements for creative industry claims need not be daunting. There are steps that claimants can follow to ensure that the events they claim for are qualifying events and that the amounts claimed are correct. We are hosting a webinar on 28 October where I will explain which organisations and events qualify, how to calculate the tax credit and how to submit the claim. This seminar is aimed at those organisations who are unclear whether these credits would apply to them or where to start on making the claims. It will also be useful if you have made claims in the past but are wondering if you could revise those claims to increase the credit to which the charity is entitled.

I hope you will join me for this event and come with any questions you wish to ask. To book your place click here.