Museum and gallery exhibition tax relief

In April 2017, HM Revenue & Customs (HMRC) introduced a new creative sector tax relief – the Museums & Galleries Exhibition Tax Relief (MGETR), which allows qualifying companies to claim a payable cash tax credit on eligible expenditure incurred in the course producing a qualifying exhibition. In order to prevent abuse, the rules are somewhat complex, but the key provisions of the relief are summarised in outline below.

Who can claim?

To qualify as an Exhibition Production Company (EPC), and thus be able to make a claim, a company:

• Must be within the charge to UK Corporation Tax; and
• Must be a charitable company which maintains a museum or gallery; or
• A company wholly owned by a charity which maintains a museum or gallery; or
• A company owned by a Local Authority which maintains a museum or gallery.

In addition, the rules require the EPC to have a substantial level of involvement in the organising of the exhibition in question. In order to qualify, an EPC:

• Must be responsible for producing and running an exhibition at a venue;
• If the exhibition is at the venue for a limited time, must be responsible for de-installing and closing the exhibition;
• Must be actively engaged in decision making and must directly negotiate for, contract for and pay for rights, goods and services;
• In the case of the Primary EPC (see below) must also make an effective creative, technical or artistic contribution.

Where an exhibition is produced at two or more venues, in addition to the ‘Primary EPC’ there may also be one or more ‘Secondary EPCs that meet the above requirements in relation to producing the exhibition at subsequent venues. These Secondary EPCs may also qualify for a measure of relief in relation to their own costs.

What exhibitions are eligible?

For the purposes of MGETR, an exhibition means a curated display of an organised collection of objects or works (or single object or work) considered to be of scientific, historic, artistic or cultural interest. HMRC is not prescriptive over the quality of exhibitions and exhibits.

An exhibition must be one to which the general public is admitted, regardless of whether an admission fee is charged. This means that exhibitions where admittance is restricted (for example by membership requirements or by exclusive private viewing) will not qualify, though hosting a limited number of private viewings during the course of a public exhibition will not necessarily be problematic.

Certain categories of exhibition are excluded from the relief. Those categories include:

• Exhibitions organised in connection with a competition;
• Exhibitions with a main purpose of selling any item on display, or of advertising/promoting any goods or services;
• Exhibitions where anything displayed is alive;
• Exhibitions which include a live performance (unless merely incidental); and
• Exhibitions where less than 25% of ‘core’ expenditure incurred (see below) is EEA expenditure.

Core expenditure is defined as expenditure incurred directly in the production of the exhibition, including (where the exhibition is displayed at a venue for less than 12 months) closing and de-installation costs. Gallery maintenance work is excluded from the definition of core expenditure unless it is directly related to the production of an exhibition.

How relief is given

The relief takes the form of an enhanced tax deduction for certain of the EPC’s qualifying costs, together with the ability to surrender away the tax loss which typically results in return for a payable tax credit from HMRC. The enhanced tax deduction is equal to the lower of:

• 100% of eligible EEA core expenditure; and
• 80% of eligible total core expenditure (EEA core plus non-EEA core).

Value of the tax credit

If the EPC has a tax loss after claiming the enhanced deduction, the amount it can surrender is the lower of:

• Its tax loss after claiming the enhanced deduction; and
• The amount of its qualifying expenditure for the period.

In return, it receives a payable tax credit at the rate of 20% or, in the case of touring exhibitions, 25%. However, the value of the tax credit is capped at £100,000 per exhibition for a touring exhibition, or £80,000 per exhibition for a non-touring exhibition. The calculation of the MGETR and the process of making the claim forms part of the EPC’s corporation tax return for the period(s) in question.

This factsheet is based on law and HMRC practice at 1 March 2019.