SolvedOTR79110 | Orchestra Tax Relief: calculation: surrenderable losses and Orchestra tax credit: example
From HM Revenue & Customs · Orchestra Tax Relief
The following example illustrates how an Orchestral Production Company (OPC) that sustains a surrenderable loss can surrender that loss in return for an Orchestra Tax Credit (OTC).
Example
An OPC undertakes a qualifying series with total core expenditure of £1m, all of which is UK expenditure. The production was commissioned by a producer who pays £900k for it.
| Income | £900k |
| Expenditure | (£1m) |
| Trading loss before Orchestra Tax Relief (OTR) | (£100k) |
| Orchestra Tax Relief - additional deduction (80% x £1m total core expenditure) | (£800k) |
| Trading loss after OTR | (£900k) |
The surrenderable loss is the lesser of:
the £900k trading loss after OTR, and
the £800k additional deduction.
In this case the OPC can surrender up to £800k and chooses to surrender the full amount. An OPC is not obliged to surrender the entire loss, but it will most likely do so.
Assuming the rate from 1 April 2025 applies (OTR10070), the amount of OTC due is therefore £360k (45% x £800k loss surrendered).
In this example the OTC is equal to 36% of the total core expenditure.