31 August 2017

Museums and galleries tax relief is coming: What should I do now?

We set out three steps to get you ready for the museums and galleries tax relief, which is due to be introduced later this year.

HM Treasury released a statement back in July confirming the Government’s intention to introduce the Museums and Galleries Tax Relief later this year. Following this announcement, many museums and galleries will no doubt be wondering if there is anything they need to do now ahead of applying for the relief. The below three key steps will ensure you are ready to make the most of the relief from day one.

Step one: Find out if your organisation qualifies for the relief

If you are a charity, wholly owned trading subsidiary or a company owned by a local authority that maintains a museum, gallery, library or archive, you should qualify for the museums and galleries tax relief.

Step two: Consider which of your exhibitions qualify

This step is a little more complex and you’ll be required to consider a number of factors.

Generally, qualifying exhibitions are those that are open to the general public and are of scientific, historic, artistic or cultural interest. It is worth noting that 25% of core expenditure must be incurred in the European Economic Area (EEA).

However, if the purpose of the exhibition is for any of the following reasons, it will not qualify for the relief:

  • A competition;
  • Promoting or selling displayed goods;
  • Promoting goods and services;
  • Displays of live objects.

Step three: Start recording costs

We recommend you begin recording your costs now in order to avoid the tedious task of picking these out when your year-end comes around. The method used to record these costs in your organisation should be carefully considered to ensure it’s done in the most efficient manner.

All costs incurred in respect of the exhibition need to be recorded, whether they are qualifying costs or not. In order to calculate the relief, you also need to record the amount of income you expect the exhibition will receive.

Qualifying costs are known as core costs and are those incurred in the producing phase before the exhibition opens, as well as sometimes the breakdown and closing phase (depending on whether the exhibition is touring). Examples include costs associated with research, exhibition installation, digital spend, insurance, transportation and the venue. Any costs arising once the exhibition is open to the public are not core costs and will not qualify for the relief.  

Non-qualifying costs, known as non-core costs, include general running costs in addition to those related to finance, marketing, storage, acquisition and legal fees.

If you have any questions about the museums and galleries tax relief, or if you would like help preparing your organisation ahead of making a claim, please do not hesitate to contact Kirsty Murray or Catriona Macleod on 0131 473 3500.

You can also read more about the museums and galleries tax relief in our fact sheet here

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