Museums and galleries in the UK can benefit from tax relief (similar to the theatre and orchestra tax reliefs) from 01 April 2017 for new touring and non-touring exhibitions, although claims cannot be made until later this year.
To qualify, the organisation must be a museum or gallery (which includes a library or archive), and it must have an exhibition where one or more objects considered to be of scientific, historic, artistic or cultural interest are displayed (indoors, outdoors or partly outdoors). The exhibition must be intended for the general public, and it does not matter whether entrance is free or subject to a charge.
The organisation making the claim must fall within the corporation tax regime: so incorporated bodies (including trading subsidiaries) should qualify. Charitable incorporated organisations who do not pay corporation tax will receive a cash payment of the amount of the relief. In some cases a trading subsidiary may maximise the amount of the tax relief claim.
An exhibition will not qualify if it is organised in connection with a competition of any kind, nor if its main purpose or one of its main purposes is to sell anything displayed. The sale of merchandise associated with the exhibition will not exclude an exhibition from relief.
The tax relief is available for the creation, development and set-up costs of temporary and touring exhibitions. It does not extend to expenditure such as running costs after the exhibition opens.
A touring exhibition must be held at two or more different venues and at least 25% of the objects, works and artefacts displayed at the first venue must be displayed at every subsequent venue at which the exhibition is held. Additionally the period between the de-installing of the exhibition at one venue and the installation of the exhibition at the next venue must not exceed 6 months. More than one museum or gallery can claim relief from a touring exhibition.
The relief is capped at the lower of 80% of the core expenditure incurred in any country and total core expenditure incurred in the European Economic Area (EEA) – provided that at least 25% of the qualifying expenditure is within the EEA. The two rates of relief are:
- 20% – for non-touring exhibitions; and
- 25% – for touring exhibitions.
The relief will allow museums and galleries to claim a credit of up to £100,000 on exhibitions that are toured and £80,000 on non-touring exhibitions.
Core expenditure means expenditure on the activities directly involved in producing the exhibition. This could include curator fees and the cost of deinstalling and closing (if incurred within 12 months). Indirect expenditure (marketing etc) and running costs (invigilation costs) are not classed as core expenditure.
Any decision to use a separate exhibition production company may involve additional expense and will require additional governance arrangements. We can help guide you through the detailed tax provisions, incorporation of subsidiaries, and provide specialist advice on how to set up appropriate governance arrangements. Please contact us for more information.