Picture this... tax relief puts museums in the frame!
Museums and Galleries can now take advantage of an extremely generous tax relief which was expected to be for a limited time only, but is now on permanent display!
The previous government have been criticised in the last few years for increasing the main rate of corporation tax payable by UK companies whilst cutting some major tax incentives such as the R&D tax relief scheme for SMEs. However, one area which has actually seen the rate of relief increased is that of creative industries, with some rate more than doubling in value. The early signs are that the new government have no plans to reverse these preferential rates in the near future, which is good news for an industry that has suffered more than most over the course of the Covid pandemic.
Museums and Galleries Exhibition Tax Relief (MGETR) is one of eight “creative industries” tax reliefs, and is available to charitable companies or normal limited companies owned by a charity or local authority that are responsible for maintaining a museum or gallery. In order to be able to claim the relief, exhibitions must be intended to be displayed to the public from the planning stage. Additionally, at least 10% of “core” expenditure incurred on the exhibition must have been spent in the United Kingdom. Prior to April 2024, at least 25% of core expenditure had to be incurred in the European Economic Area (EEA).
As with all of the other creative industry reliefs, the claimant must be responsible for producing, running and deinstalling the exhibition at a venue, actively engaged in the decision making and should directly negotiate for, contract for and pay for rights, goods and services relating to the exhibition.
If these criteria are met, the museum or gallery can potentially qualify for this relief. All costs incurred in the production, installation and deinstallation are relevant, and the effective rate of relief is hugely generous. Until 27 October 2021, an effective tax credit rate of 16% could be claimed for non-touring productions (broadly productions within one museum or gallery) and a 20% rate could be claimed for touring productions. Since late October 2021, the effective rates have increased for touring and non-touring productions to 36% and 40% respectively, i.e. at least doubling in value.
It was intended that the rates would revert back over the last couple of years, but these rates have now been made permanent by the previous Conservative government in its final budget. As such, this is one of the most generous tax reliefs available with eligible companies able to claim back more than one-third of their core expenditure on qualifying exhibitions.
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