Orchestra Tax Relief: A Beginner's Guide

Traditional orchestras, jazz bands and even orchestral reproductions of pop songs could all benefit from the UK’s Orchestra Tax Relief incentive. The generous scheme supports UK arts by reducing Corporation Tax bills or – crucially – through a cash credit.

What is Orchestra Tax Relief (OTR)?

Orchestra Tax Relief, commonly referred to as OTR, was introduced in 2017 to support homegrown arts in the UK. It offers production companies the ability to claim back some of their production costs, either as a reduction in their Corporation Tax bill or as a cash credit.

Giving production companies money back on their production costs, OTR is an essential support for the arts, giving many productions a lifeline during the Covid-19 pandemic and beyond.

Who Can Qualify for OTR?

There are limits on which companies can claim OTR. It’s designed to support the companies that are actually delivering the orchestral production, otherwise known as Orchestral Production Companies (OPCs).

To be considered the OPC, your company must:

• Be registered for UK Corporation Tax (individuals, partnerships and LLPs cannot claim)
• Be a going concern at the time of making the claim
• Be responsible for the orchestral production from start to finish
• Playing an active role in planning, decision-making, contracting, and paying for goods and services including the performers

The relief supports companies that make an artistic contribution to the production; to this end, a company that simply commissions a production or operates as a contractual intermediary won’t qualify for OTR.

Importantly, OTR only allows a single OPC per production. If multiple companies could meet the criteria, only the one "most directly engaged" in the production may claim.

What Productions Qualify for OTR?

The definition of an “orchestral production” is intentionally broad, allowing many different styles of orchestral performance to qualify.

A production must meet the following conditions to qualify:

• The production features at least 12 instrumentalists, with the majority of instruments unamplified, and the instrumentalists being the primary focus of the concert.
• It is intended to be performed live to paying members of the general public, or provided for educational purposes.
• It meets the minimum core expenditure requirement:
  • At least 10% of core costs must be UK-based expenditure for accounting periods ending on or after 1 April 2024
  • At least 25% must be European expenditure for accounting periods ending before April 2024

Unfortunately, there are some exceptions to these criteria. Even if a production meets the above criteria, it will be ineligible if:

• Its primary purpose is to make a recording (check out the Audio-Visual Expenditure Credit instead).
• It is produced primarily to advertise.
• It includes a competition or contest.
• It is produced purely for training purposes.
• It is not ticketed; public events that encourage donations do not qualify.

You can read more about qualifying productions here: Which productions qualify for Orchestra Tax Relief?

What is OTR Worth?

The value of your tax credit depends on your company’s profitability, its accounting period and the amount of UK/EEA expenditure you have.

You can claim the lower of:

• 80% of your core costs
• The amount of your UK core costs (or EEA core costs for accounting periods beginning before 1 April 2024)

For example, a company with core costs exclusively in the UK can only claim 80% of those costs, but a company with 50% UK costs and 50% foreign costs (e.g., for a global touring production), they can only claim their UK core costs.

A profitable company can use OTR to reduce its taxable profits (and thus its Corporation Tax bill!).

However, loss-making companies can surrender their losses for a cash credit – an appealing option for many!

The rates for surrendering your losses are:

• For expenditure incurred between 27th October 2021 and 31 March 2025: 50%
• For expenditure incurred from 1 April 2025: 45%

This means that your benefit when claiming OTR could be the following:

What Costs Are Eligible for OTR?

‘Core costs’ show up repeatedly when making your claim: you can only claim up to 80% of your core costs, you can only claim if at least 10% of your core costs are UK based, but what actually are core costs?

Core costs are expenditure directly related to producing the orchestral production up to the point of performance. This excludes early-stage speculative development costs, non-producing activities, and the costs of running the performance itself.

Core Costs & Phases of Production

OTR supports companies through the development of an orchestral production, but not through its actual performance, nor in those early conceptual stages.

The four phases of a production, according to HMRC, are development, production, running and closing. Of these four, only production and closing are considered ‘core costs’ and therefore eligible.

The development phase includes all speculative activity to assess commercial viability. These costs are not eligible for OTR.

The production phase begins when the project is "green-lit" and ends at the first live performance. Eligible activities include production team meetings, hiring musicians, rehearsals, venue preparation, accommodation, and expenditure on music rights.

From the first curtains-up to the last performance are considered the running phase. These costs are NOT eligible, even if similar costs were eligible during production. The only exception to this is travel to and from unusual venues.

Closing costs (vacating the venue, moving and selling items) can also qualify.

Where costs span multiple phases — for example, a conductor's fees across the whole project — they must be apportioned on a just and reasonable basis.

Some costs are always considered ineligible, no matter when they occur:

• Financing, sales, and distribution costs
• Advertising and marketing
• Legal, accountancy, and audit fees
• Bank interest and charges
• Completion bonds and other insurance
• Capital expenditure

Location of Expenditure

The location of your expenditure is crucial. For accounting periods ending on or after 1 April 2024, only UK expenditure qualifies, which is defined as expenditure on goods and services used or consumed in the United Kingdom. The worker must be physically based in the UK; nationality or company location are irrelevant.

For accounting periods ending before 1 April 2024, European expenditure (goods or services provided from within the UK or EEA) is eligible.

Where individuals split their time between qualifying and non-qualifying locations, costs must be apportioned on a "just and reasonable basis", much like personnel spending time across eligible and ineligible phases.

How Do You Make a Claim?

Each orchestral production must be treated as a separate trade for tax purposes, with its own profit and loss account reported to HMRC. A new trade begins on the earliest of: the commencement of the production phase or the receipt of income for the production.

For productions with multiple dates (touring or in residency), an OPC can elect to treat the full series of concerts as a single trade. This election must be made in writing to HMRC before the first concert or before the first tax return is submitted.

OTR is cumulative; if your production runs across multiple accounting periods, you can choose to claim the entire production in the final accounting period. However, many choose to make an annual claim to get the tax benefits sooner rather than later.

One practical step to consider is setting up a Special Purpose Vehicle (SPV) for each production. This makes it much easier to allocate costs and revenue accurately, simplifying both HMRC reporting and loss surrender calculations.

The Additional Information Form (AIF)

From 1 April 2024, all OTR claims must be accompanied by an Additional Information Form (AIF), which must be submitted to HMRC before your Corporation Tax Return (CT600). Each accounting period requires its own AIF.

The AIF requires key details including:

• VAT registration and PAYE reference numbers
• Production name, status (ongoing, complete, or abandoned), and key dates
• Total expenditure and core costs per production
• Amount of credit being claimed
• Details of any connected party transactions

The Deadline

A company has up to two years from the end of its accounting period to make a claim. Claims can be amended, resubmitted, or withdrawn within this window.

For example, Company A ran a production that finished within the accounting period ending 31 December 2025. The company has until 31 December 2027 to make its OTR claim for that production, no matter its start date.

What Evidence Do You Need to Make a Claim?

Robust record-keeping is essential, both to support your claim and to withstand any HMRC compliance check.

We strongly recommend that you keep evidence of the following, to support you in preparing your claim as well as in the event of a compliance check from HMRC:

• Active involvement in the production. A contract simply labelling a company as a "production company" is not sufficient. Internal correspondence, invoices for subcontracted staff, and timesheets for internal staff are all examples of appropriate evidence.
• Sufficient records of costs incurred. A breakdown of expenditure by category per production, including a split between UK (or European) and non-UK costs. This is crucial for calculating your claim, as well as evidencing it to HMRC.
• Computations showing how the additional deduction and any credit were calculated. This is also essential for your own claim preparation.
• Any methods of apportionment or assumptions used in producing figures.

HMRC compliance checks have been on the rise across UK tax relief incentives, so thorough documentation is more important than ever.

Need help with your OTR claim?

Myriad are specialist creative tax relief consultants with a strong track record with OTR claims for UK orchestral production companies. With a few hours of your time, we handle everything from identifying eligible costs to working with HMRC to agree your claim.

Get in touch with the expert team for a free, no obligation discussion of your claim.