Museums & Galleries Exhibitions Tax Relief | A Helpful Guide

May 30, 2018

If you are a museum or gallery you might be wondering if you can apply for the Museums & Galleries Tax Relief?

We have been helping clients recently with their claims and thought it would be useful to put together a short video to discuss the benefits of the relief and how you can go about applying. We asked Hazel Pratt, Head of our Tourism & Hospitality Sector Group to share some useful tips.  

In this short video Hazel discusses the benefits of the relief and the process for qualifying.

 

Covered in this video:

► Who qualifies?

► What costs qualify?

► How to make the claim

 

If you have any questions, please drop them into the comments section or contact Hazel directly at hazel.pratt@hlca.co.uk

*Edited Video Transcript*

What is Museums & Galleries Exhibitions Tax Relief?

 

If you run a museum or a gallery you may have heard of the Museums and Galleries Exhibitions Tax Relief. Perhaps you don’t think you qualify for it. In this short video, we will go over who qualifies and what the relief is.

The Museums and Galleries Exhibitions Tax Relief, we will call it Exhibitions Tax Relief for short was brought in on 1st April 2017 to recognise the value that museums bring to communities around the UK. The relief can provide the opportunity for exhibitions to go out on tour, to areas of the country that perhaps would not have had the chance to see these exhibits.

Who qualifies for Museums & Galleries Exhibitions Tax Relief?

 

It’s only available to charities. You can either be the charity itself, or the trading subsidiary of a charity, or a company that is owned by a local authority. I have had conversations with charities who have thought that they didn’t qualify for the relief because they weren’t within the charge to corporation tax, they didn’t pay tax, but that’s not the case. The relief is available to charities, even if you’re a SCIO or if you’re a charity that is limited by guarantee.

However, not all exhibitions will qualify for the relief. I was at an exhibition the other week, where they were going on to sell the paintings that were on show. That wouldn’t qualify, and there are other types of exhibitions that also would not fall into this relief. The major benefit of this relief is that it allows you to get cash back from the government and you can use that money as cashflow to help you in the general operations of your business.

What costs qualify for Museums & Galleries Exhibitions Tax Relief?

 

There are a number of costs that are involved in setting up an exhibition and there are set up phases. The first phase is where you’re perhaps not sure if you’re going to go ahead with that exhibition. The second phase is where, yes, you are going to go ahead, and you’re incurring the costs of setting it up. The third phase is where it’s actually running and it’s open to the public. The fourth phase is where you’re dismantling it.

The second phase and the fourth phase are the ones that qualify for the relief. The second phase, when you’re actually in production, that’s where you’re setting up your exhibition, so you’re incurring all the costs of laying it all out. The fourth phase is where you’re dismantling it. These costs will only qualify if you dismantle that exhibition within 12 months of opening up the exhibition. Not all the costs in the second and fourth phase will actually qualify. If your costs are direct, then they are more likely to be qualifying, but indirect costs, such as marketing and legal costs, these will not qualify for the relief.

What costs qualify for Museums & Galleries Exhibitions Tax Relief?

 

It forms part of your corporation tax return, and for each of the exhibitions that you have put on, you have to prepare a separate profit and loss account to ensure that you’ve gathered all the relevant costs. At this point, this is probably a good time to get in contact with your accountant, to make sure you’re actually claiming all the costs that you can, so that you’re maximising the claim.

Any questions about Museums & Galleries Exhibitions Tax Relief?

 

If you’ve got any questions or comments, please contact me directly at hazel.pratt@hlca.co.uk. Please remember this is a general overview and all circumstances are different, so seek professional advice before you take any action.

 

The information is this video is of a general nature and seeks to highlight some of the issues which could be affecting you and/or your business, including changes to financial regulation and legislation. Viewers should not rely on this information without seeking professional advice on its application in their circumstances.