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Learn how to include development costs in your Theatre Tax Relief claim and get the most from your theatrical production.
When you’ve invested thousands into your theatrical production, but ticket sales haven’t yet come in, claiming back as much as possible is a high priority for many production companies. You want to know if you can claim for your development costs; the answer is critical because understanding which costs qualify determines how much Theatre Tax Relief you can claim.
The short answer is no, development costs can't be included in your TTR claim. But understanding why this rule exists, and when your costs do become eligible, can help you make the most of your claim.
Development costs are any expenses you incur before your production is "green-lit", i.e., before you've committed to proceeding with the theatrical production.
This typically includes:
HMRC considers these activities speculative. You're still deciding whether the production is going to go ahead, so the expenditure doesn't contribute directly to producing the theatrical production itself.
Some of this work will be used in the production if it is green-lit and those costs are treated in a specific way – more on this below.
TTR supports the physical delivery of theatrical productions, not the early speculative stages. The scheme is designed to incentivise companies that actively produce, run and close theatrical productions, not those exploring whether a production might work.
Once you've decided to proceed with the production, your costs become eligible. From this point forward, your expenditure transforms an idea into a theatrical production ready for performance, so long as your production is eligible for TTR.
Your costs become eligible for TTR once the production phase begins. This phase starts when your project is green-lit and ends when the curtain goes up for the first live performance to a paying public or first educational performance.
The production phase includes:
You can claim on these core costs, provided they meet the minimum expenditure requirement. For accounting periods ending on or after 1 April 2024, at least 10% of your core costs must be UK expenditure. For earlier periods, at least 25% must be European expenditure.
Some expenses will naturally cross over between development, production and running phases. For example, your director might be involved from the initial concept through to opening night. Your scriptwriter may write the initial draft during development, then revise it throughout production.
You'll need to apportion these costs on a "just and reasonable basis". HMRC accepts several methodologies, provided you can justify your approach.
For key personnel like directors or producers, you might split fees based on time spent in each phase. If your director spent three months on development and nine months on production, you could claim 75% of their fees.
For scriptwriters, you might exclude the initial script cost as development expenditure, but include fees for subsequent revisions made during the production phase.
Whatever methodology you use, document it clearly. You should be able to explain your apportionment to HMRC if they enquire into your claim.
Beyond development costs, you can't claim for normal running costs. The running phase begins with the first curtains-up and ends with the last live performance.
Running costs include:
However, exceptional running costs can qualify if they involve substantial reworking of the production. A major recasting or complete set redesign would qualify, but replacing a minor character wouldn't.
You also can't claim for costs unrelated to producing the show, such as:
You can claim TTR on the lower of:
If your production is touring, you can surrender losses at a higher rate than non-touring productions. For accounting periods beginning on or after 1 April 2025, touring productions can surrender at 45%, whilst non-touring productions surrender at 40%.
You need sufficient evidence to demonstrate when your production was green-lit and which costs fall into each phase.
You should try to keep:
HMRC compliance checks have increased across tax reliefs. Strong record-keeping from the start will make any enquiry straightforward.
Understanding when costs become eligible allows you to structure your production effectively. Working with a specialist tax adviser with experience in Theatre Tax Relief ensures you're claiming everything you're entitled to whilst maintaining full compliance with HMRC's requirements.
Development costs can't be included in your Theatre Tax Relief claim, but nearly everything from the moment you commit to the production onwards becomes eligible. If you'd like support structuring your TTR claim or advice on apportioning costs across production phases, get in touch.
Learn how to include development costs in your Theatre Tax Relief claim and get the most from your theatrical production.
Claiming R&D tax credits for the first time? Learn the deadlines, forms and documentation HMRC requires, and how to submit a fully compliant first-time claim.
Not all theatre qualifies for TTR. Learn which productions meet HMRC's criteria and how to make sure your show is eligible for tax relief.
Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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