Orchestra Tax Relief overview: What it is, who can benefit and how we can help

Orchestra Tax Relief (OTR) is a government initiative for instrumental groups (not only orchestras!) where you could receive a payment from HMRC equal to a percentage of your production costs.

Despite being called 'Orchestra Tax Relief':

• the initiative can apply to many types of instrumental group – so don’t be put off if your group is not a traditional orchestra 
• you don’t have to be paying tax to claim it.   

Groups who put on eligible performances can submit a claim to HMRC each year for the payment. 

For our member groups who have claimed so far, the average payment has been 23% of their annual production costs (comprising all costs that go into putting on a performance, including rehearsal venue hire, MD fees, music hire and performance venue hire). 

We have lots of guidance and resources to help – including a service where we submit the OTR claim to HMRC on your behalf. 

Why is it so great?

Lots of reasons – we think two of the biggest are:

• No cultural test:  OTR is not dependent on what is being performed, who the audiences are, how technically able the musicians are or how modern the composer. It is simply money to encourage putting on events – events  you would be putting on anyway.
• It’s there every year – if you do performances or concerts that qualify every year, you can claim every year

"We are delighted to have just received our first payment from HMRC for Orchestra Tax Relief. We worked closely with Making Music on this - they provided us with training at the start of the process and hand-holding throughout. Hopefully, many other amateur orchestras will also take advantage of this welcome governmental support to amateur music."

David Smith, Ealing Symphony Orchestra

Who can claim?

If your group puts on events  featuring 12 or more instrumentalists who are the main focus of the performance, then you can potentially claim OTR.

How much money do we get?  

This varies vary from group to group, but the average payment so far has been around 23% of the annual production budget. Some examples of claims we have submitted so far shown in the table below.

How do we claim?

Claiming OTR will involve a bit of work and some changes to how you operate. We have resources and services to help every step of the way. Our guidance (see below) explains how it works in detail, but at the most basic level it involves:

• Your group setting up a limited company and sub-contracting concert production activities to that company
• The production company submits an OTR claim to HMRC in the form of a tax return.

How do we find out more?

We have lots of guidance and resources to help. We have broken them into three sections: 

1.    Deciding if OTR is for you – free to members; 

Guidance - Introduction to OTR – Is it for you? including:

• Eligibility decision-making flow chart - how to work out if you qualify for OTR or not
• Sample calculations - a breakdown of a typical concert budget, to help you decide if OTR is worth it for your group

2.    Setting up for OTR (the nuts and bolts) – free to members

If you’ve decided OTR is for you, this goes into more detail of how it works:

Toolkit: setting up a production company

• Guidance: Setting up a Production Company
• Template: Memorandum & Articles of Association
• Template: Declaration of Trust
• Guidance: Completing form IN01

Toolkit: running a production company

• Guidance: Running a Production Company
• Template: Agreement between Parent Organisation & Production Company
• Guidance: Notes to accompany the agreement
• Guidance: Making an Election to HMRC
• Sample: Timeline for an OTR year
• Template: Transfer of Stock

3.    Keeping accounts and making a claim – paid for service

This service includes: 

• a template accounting document
• help preparing your accounts and filing them with Companies House
• compiling and submitting an OTR claim to HMRC on your behalf.

There is a fee for this service: 

• Our fee will be 12% of the OTR payment you receive from HMRC
• That 12% figure will include VAT
• There is a minimum fee of £175
• There is no maximum fee, but we are happy to negotiate a fee cap for large OTR claims.

Example:  

• You get £6,000 from HMRC. 12% of £6,000 = £720. Our fee is £720
• You get £2,500 from HMRC. 12% of £2,500 = £300. Our fee is £300
• You get £1,200 from HMRC. 12% of £1,200 = £144. Our fee is £175

(all prices include VAT)

We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.