What is the annual cap on theatre tax credits under section 1217KC of the Corporation Tax Act 2009?

Section 1217KC sets a financial ceiling so that total theatre tax credits payable to any single undertaking in any year must not exceed 50 million euros. This limit ensures compliance with State aid rules carried over from EU law into United Kingdom legislation following IP completion day on 31 December 2020.

How is the term 'undertaking' defined for the purposes of the theatre tax credit cap?

The term 'undertaking' is interpreted in line with the General Block Exemption Regulation as it stood immediately before IP completion day. It broadly means any entity engaged in economic activity, regardless of legal form, and can encompass a single company or a wider group of connected entities depending on how the regulation applies.

Which General Block Exemption Regulation does section 1217KC refer to?

Section 1217KC refers to any regulation in force under Article 1 of Council Regulation (EC) No 994/98 immediately before IP completion day (31 December 2020) that made declarations relating to aid in favour of culture and heritage conservation. This preserves the State aid framework as it applied when the UK left the EU single market.

How does the 50 million euro cap apply to group companies claiming theatre tax credits?

Where multiple group companies constitute a single undertaking under the General Block Exemption Regulation, their theatre tax credit claims are aggregated. The combined total, converted to euros at the relevant exchange rate, must not exceed 50 million euros per year. Any excess above that limit would not be payable under section 1217KC.

Corporation Tax Act 2009 section 1217KC

Limit on State aid

Section 1217KC imposes a cap on the total theatre tax credits that any single undertaking can receive in a year, in line with State aid rules.

Total theatre tax credits payable to any single undertaking must not exceed 50 million euros per year
The cap applies to credits paid under the theatre tax credit payment provisions of section 1217KB
The term "undertaking" takes its meaning from the EU General Block Exemption Regulation as it stood immediately before IP completion day
The relevant regulation is one that was in force under Council Regulation (EC) No 994/98 and related to aid for culture and heritage conservation

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