As announced at Autumn Statement 2013, the government is introducing a new tax relief for theatre productions both to encourage theatre production across the whole of the UK and provide a strong incentive for touring productions.

Further details on the relief were announced at Budget 2014 which confirmed that the relief will be available for a wide range of theatre and performance supporting plays, musicals, opera, ballet and dance. Two rates will be available under the scheme; 25% for touring productions and 20% for other theatre productions.

It is intended that the new relief will be available from September 2014. Qualifying expenditure forming the basis of any claim is that which is incurred on or after this date. Where an accounting period straddles that date, expenditure arising in that period must be apportioned between the period on or before 31 August 2014 and the period on or after 1 September 2014.

This relief is intended to fall under revised General Block Exemption Regulation rules, which will allow for a State aid exemption when aid is for culture and heritage. The current draft is available on the Europa website.

Under these rules, the maximum relief available per company is £50 million, and the maximum aid intensity should not exceed 100% of eligible costs. Aid intensity includes all sources of government funding, including for example grants and lottery funding. Companies in receipt of other funding may need to declare all sources of funding to HMRC and confirm that they do not exceed this limit. A clawback mechanism may be needed to ensure that aid intensity does not exceed 100%.

There was an open consultation on the Theatre Tax relief which ran for a period up to 8^th May.