Museums and Galleries Exhibition Tax Relief
Who can qualify for Museums and Galleries Exhibition Tax Relief?
In order to qualify the production company must either be a charity or a company wholly owned by a charity or local authority. They must contribute to the technical, creative or artistic aspect to the exhibition, be involved with decision-making and directly negotiate contracts and pay for rights, goods and services.
- Organised collection of objects/works that is curated for public display that is of interest, scientifically, historically, artistically or culturally
- Potentially an exhibition comprising of a single object
- At least 25% of the core costs must relate to activities within the United Kingdom or European Economic Area (this applies post-brexit, however legislation may change in the future)
Museums and Galleries Exhibition Tax Relief is not available when:
- anything displayed is for sale
- anything displayed is alive
- Where there is a live performance by individuals (incidental exceptions apply)
- It is organised as part of a competition
Although there can only be one primary company for the production of an exhibition in order to qualify, where the exhibition is intended to be touring, one or more secondary production companies may be involved, where it is
- Responsible for producing and running the exhibition at the secondary venue
- Engaged in the decision making process at the secondary venue
How much can you claim?
Qualifying companies can claim an additional deduction on their Corporation Tax Return which will reduce their profits or increase any loss thereby reducing their Corporation Tax liability. As an alternative they can surrender a loss in return for a repayable tax credit.
The additional deduction will be the lower of:
- 80% of the total core expenditure
- the amount of core expenditure in the United Kingdom or European Economic Area
Essentially, core expenditure is expenditure incurred on pre-production, principal photography and post-production. It excludes expenditure on development, distribution or other nonproduction activities.
If the company is shown to make a loss after applying the additional deduction on it’s Corporation Tax Return, all or part of the loss can be surrendered in return for a repayable tax credit at a rate of 45%.
There is also a higher rate of 50% if your exhibition is touring. Your exhibition will be classed as touring if:
- the original exhibition was intended to be touring at the initial planning stage
- the exhibition is at more than one venue where there is at least 25% works displayed at the original exhibition, displayed at each subsequent venue
- not a period of more than 6 months go by from the dismantling of one venue to the installation of the next venue
The claim should be made within one year of the company’s filing date and can be amended or withdrawn within that period.
In March 2023, it was announced in the Spring Budget that the higher rates of 45%/50% reliefs will be extended till April 2025 and then tapered down to 30%/35% from April 2025 onwards.
Working examples for Museums and Galleries Exhibition Tax Relief
The British Museum puts on an exhibition of Egyptian treasures which it is to showcase at their own site and is not intended to tour any other venues. It generates income of £2.5m in their current financial year and has total costs of £1.5m
Of the £1.5m in costs during the financial year it has qualifying core expenditure of £1.1m(1) .
Of the same £1.5m in costs during the financial year it has qualifying core expenditure of £1.0m(2) which was spent within the UK/EEA regions.
Corporation Tax filing would be as follows if Museums and Galleries Exhibition Tax Relief was not applied:
Income: £2,500,000
Expenditure: £1,500,000
---------------
Profit/Loss: £1,000,000
Corporation Tax Liability: £ 250,000
(£1,000,000 x 25%)
Corporation Tax filing would be as follows if Museums and Galleries Exhibition Tax Relief was applied:
Income: £2,500,000
Expenditure: £1,500,000
Additional Deduction: £ 800,000
(lesser of (1) 80% of £1,10,000 and (2) £1,000,000)
---------------
Profit/Loss: £ 200,000
Corporation Tax Liability: £ 50,000
(£200,000 x 25%)
Should the orchestra production company apply Museums and Galleries Exhibition Tax Relief, instead of the company paying a Corporation Tax bill of £250,000 it would only pay £50,000, saving themselves £200,000 which they could potentially invest in other projects.
Next Steps
If you or your organisation have a potential claim for tax relief, or would like further information about the process you can get in touch with us to arrange a no obligation meeting either by phone or in person.
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