HMRC has updated its guidance on the Creative Tax Reliefs, to reflect the impact of furlough money. The following is reproduced from HMRC guidance.

Museums and Galleries Exhibition Tax Relief

Furlough payments, including those met by the Government through the Coronavirus Job Retention Scheme (CJRS)

Expenditure is only included in the separate exhibition trade if it has been incurred by the company on the activities involved in developing, producing, running, deinstalling or closing the exhibition, as per s1218ZBC(1). To qualify for an additional deduction, expenditure must also meet the definition of ‘core’ in s1218ZDC: it must be on the activities involved in producing, deinstalling or closing the exhibition at a relevant venue.

When a company places an employee on furlough, the employee must cease work. The employee is not carrying out the activities listed above and is not working on producing the exhibition.

Staffing costs in respect of an employee on furlough are therefore not considered by HMRC to be incurred on producing the exhibition and do not constitute production expenditure. Such payments are not considered to be costs of the separate exhibition trade and are not eligible for tax relief.  This applies equally to all furlough payments, whether or not they are reimbursed by the CJRS, and includes any ‘top-up’ element. If an employee has been placed on flexible furlough, then any payment in respect of the furloughed time will not be eligible.

Holiday pay and sick pay are statutory requirements. HMRC considers them to be a necessary cost of employing staff and part of the cost of their working time. Any period during furlough which is taken as annual leave or recorded as sick leave is potentially eligible for relief, and should be apportioned in line with work done.

Orchestra Tax Relief

Furlough payments, including those met by the Government through the Coronavirus Job Retention Scheme (CJRS)

Expenditure is only included in the separate orchestral trade if it has been incurred by the company on the activities involved in developing or putting on the concert or concert series, as per s1217QD(1). To qualify for an additional deduction, expenditure must also meet the definition of ‘core’ in s1217RC(1): it must be on producing the concert or concert series.

When a company places an employee on furlough, the employee must cease work. The employee is not carrying out the activities listed above and is not working on producing the concert.

Staffing costs in respect of an employee on furlough are therefore not considered by HMRC to be incurred on producing the concert and do not constitute production expenditure. Such payments are not considered to be costs of the separate theatrical trade and are not eligible for tax relief.  This applies equally to all furlough payments, whether or not they are reimbursed by the CJRS, and includes any ‘top-up’ element. If an employee has been placed on flexible furlough, then any payment in respect of the furloughed time will not be eligible.

Holiday pay and sick pay are statutory requirements. HMRC considers them to be a necessary cost of employing staff and part of the cost of their working time. Any period during furlough which is taken as annual leave or recorded as sick leave is potentially eligible for relief, and should be apportioned in line with work done.

Theatre Tax Relief

Furlough payments, including those met by the Government through the Coronavirus Job Retention Scheme (CJRS)

Expenditure is only included in the separate theatrical trade if it has been incurred by the company on the activities involved in developing, producing, running and closing the production, as per s1217IC(1). To qualify for an additional deduction, expenditure must also meet the definition of ‘core’ in s1217GC: it must be on producing or closing the production.

When a company places an employee on furlough, the employee must cease work. The employee is not carrying out the activities listed above and is not working on producing or closing the production.

Staffing costs in respect of an employee on furlough are therefore not considered by HMRC to be incurred on producing the theatrical production and do not constitute production expenditure. Such payments are not considered to be costs of the separate theatrical trade and are not eligible for tax relief.  This applies equally to all furlough payments, whether or not they are reimbursed by the CJRS, and includes any ‘top-up’ element. If an employee has been placed on flexible furlough, then any payment in respect of the furloughed time will not be eligible.

Holiday pay and sick pay are statutory requirements. HMRC considers them to be a necessary cost of employing staff and part of the cost of their working time. Any period during furlough which is taken as annual leave or recorded as sick leave is potentially eligible for relief, and should be apportioned in line with work done.