Institutions slow to claim tax relief on their exhibition costs

With only 13% of the expected £30m claimed in 2018-19, there is concern that the relief may be dropped
Exhibitions Tax
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Geraldine Kendall Adams
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Museums and galleries across the UK could be missing out on significant sums of money by not claiming tax relief on their exhibition costs.

Since HMRC introduced the Museums & Galleries Exhibition Tax Relief in 2017, there has been relatively low take-up. In 2018-19, 50 claims supporting 300 exhibitions were made, receiving a total of £4m – an encouraging figure but a much lower amount than the £30m a year budgeted for by the Treasury.

“The figures look promising but they could be higher,” says Alistair Brown, policy manager at the Museums Association, which was one of the sector bodies involved in securing the relief. “We want to ensure that everyone who’s eligible is taking up the opportunity.”

The tax relief applies to production costs for touring, permanent and temporary exhibitions. Non-touring exhibitions can claim 20% of qualifying expenditure, with claims capped at £80,000 per exhibition, while touring exhibitions can claim 25% of qualifying expenditure, with a cap of £100,000 per exhibition, per venue. Up to £500,000 of relief on exhibitions can be claimed each financial year.

Policymakers are concerned that the relief may be dropped if it is not seen to be fulfilling its purpose; among the eight creative sector reliefs introduced in recent years, it is the only one to include a sunset clause that could see it expire in 2022. This was probably included because the relief is “a bit experimental”, says Brown. “We need to demonstrate that it does work, and it is meeting its policy goals.”

The slow rate of claims is likely to be because it is simply taking time for museums to get into the habit of using the relief, adds Brown. But take-up has also been hampered by some of the complexities involved in the process.

Complex process

Claims must be made through an entity that is able to submit a full corporation tax return – in some cases, museums have found that this process is not worth the trouble. Other institutions have found that making a claim has had an impact on their VAT bills.
There is also a split incentive for local authority museums, says Brown, because any money recovered goes into the general local authority pot rather than directly benefiting the museum. “These are things we want to iron out and we’re talking to the government about resolving them,” he says.

University of Cambridge Museums made a successful claim of £386,746 in July. Jo McPhee, head of University of Cambridge Museums Programmes, says: “The money generated through exhibition tax relief is enabling us to programme and produce exhibitions over the coming years that will play a significant role in bringing internationally excellent exhibitions to wider and more diverse audiences.”

But she agrees the process needs to be simpler. “The work involved in performing separate calculations for each exhibition can pose barriers for some smaller museums making the claims, and any simplifications to the scheme would be welcome including, for example, allowing a season of exhibitions of up to 12 months to be grouped together as a single trade.”

London’s Whitechapel Gallery has also made a successful claim, recovering £111,703 against 13 exhibitions. The gallery’s managing director, Tony Stevenson, says: “Don’t be put off by assuming that the process is over-complicated. It is fundamentally straightforward, and a lot of clear advice is available to enable anyone without advanced finance or taxation knowledge.”

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