UPDATE: the consultation for Museums and Galleries tax relief is now closed, and the relief was dropped from the 2017 Finance Bill – read more information here.
George Osborne’s Budget announcement in March included some additional information on the much-anticipated museums and galleries tax relief. We now know that the government plans to introduce this relief from April 2017, and it will informed by a consultation which it plans to run from summer 2016. While we’ll have to wait for the legislation for full details, there are existing creative industry tax reliefs which we can look at to get an idea of how the new relief may be structured.
With this in mind, I imagine that the new relief will be available for businesses subject to corporation tax; this includes charities. In previous creative industry consultations HMRC have been very keen to keep the scope of reliefs wide, allowing as many businesses to benefit as possible, and it’s reasonable to assume that the legislation for museums and galleries will be drafted in a similar manner.
We already know from the Budget that George Osborne intends to provide tax relief to museums and galleries that create temporary and touring exhibitions but no further information was given as to what costs will qualify for relief and what tax benefits the relief will give. Again, looking at the creative industry tax reliefs we already have, the new relief may allow businesses to claim an additional deduction for tax purposes amounting to a percentage of all costs directly associated with creating the exhibition. I would also anticipate that there might be an option whereby businesses that make a loss on an exhibition can surrender this loss for a tax credit which would be payable by HMRC.
Finally, an interesting point to note from the Orchestral Tax Relief which came into force from April this year is that orchestras have to make an election in writing to HMRC for orchestral concert series. This election needs to be made before the date of the first concert in the series but the need for an election does not appear in any of the legislation for theatres or film production companies. It will be intriguing to see if HMRC will put a similar stipulation for museums and galleries which have collections shown at numerous sites.
The above is my best take on the issue using what we know so far, and the exact relief may of course end up very different. We’ll keep our clients updated with more details as and when we have them – if you’d like to get more info, sign up for our specialist Charities eShots by emailing firstname.lastname@example.org.