Policy paper

Museums and galleries tax relief

Published 5 December 2016

Who is likely to be affected

Incorporated museums, galleries and other qualifying heritage institutions, including those run as charitable companies, their subsidiaries or those with trading subsidiaries that are run under the control of a local authority, that are directly involved in the production of new exhibitions. Commercial businesses are unable to claim this relief.

General description of the measure

This measure will enable eligible museums and galleries to claim tax relief for qualifying expenditure on new exhibitions, including those that tour. Relief will apply at rates of 20% for non-touring exhibitions and 25% for touring exhibitions and relief will be capped at an equivalent of £500,000 of qualifying expenditure per exhibition.

Policy objective

This measure is intended to encourage museums and galleries to develop creative new exhibitions and to display their collections to a wider audience, supporting British culture.

Background to the measure

At Budget 2016 the government announced its intention to introduce a new tax relief for temporary and touring exhibitions from April 2017. A consultation on the proposed design took place from 5 September to 28 October.

The government has now announced at Autumn Statement that it will broaden the scope of the relief to include permanent exhibitions so that it is accessible to a wider range of institutions across the country.

Detailed proposal

Operative date

The measure will have effect for qualifying expenditure incurred on and after 1 April 2017 and before 31 March 2022, though qualifying institutions will only be able to submit claims after Finance Bill 2017 receives Royal Assent.

The legislation will include a sunset clause which means the relief will expire in April 2022 unless renewed. In 2020 the government will review the tax relief and set out plans beyond 2022.

Current law

There are currently no targeted direct tax reliefs for this sector.

The new tax relief for museums and galleries is based on the existing creative sector tax relief model which includes the film and high-end television tax reliefs. These are found in Part 15 of the Corporation Act 2009.

Proposed revisions

Legislation will be introduced in Finance Bill 2017 to provide a Corporation Tax relief for the production of new exhibitions by qualifying museums and galleries.

The relief will allow qualifying companies engaged directly in the production of exhibitions to claim an additional deduction in computing their taxable profits and where that additional deduction results in a loss, to surrender those losses for a payable tax credit. Qualifying companies may claim a credit worth up to £100,000 on exhibitions that are toured and £80,000 on non-touring exhibitions. The maximum credit allowable is the equivalent of qualifying expenditure of £500,000.

Summary of impacts

Exchequer impact (£m)

2016 to 2017	2017 to 2018	2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022
-	-5	-30	-30	-30	-30

These figures are set out in table 2.1 of Autumn Statement 2016 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Statement 2016.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

The costing includes a behavioural effect to account for increased spending on new or improved exhibitions and tours as a result of the relief.

Impact on individuals, households and families

This measure is not expected to have an impact on individuals, households or the formation, stability or breakdown of families.

Equalities impacts

This measure is not expected to have a significant impact on people with protected characteristics and the government has not identified any other equalities impacts.

Impact on business including civil society organisations

This measure is expected to have a small positive impact on businesses. This measure is expected to increase activity within the museums and galleries sector. Over 1,500 institutions are forecast to be within scope of this relief.

Eligible companies may face some negligible one-off and on-going administrative costs in order to qualify for this relief. HM Revenue and Customs (HMRC) expects the total one-off costs associated with familiarisation with the new legislation, processes and requirements to be minimal, particularly given that most museums and galleries are already expected to keep good financial records of each individual exhibition. The government consulted widely with the sector to ensure the design of the relief works well for museums and galleries and limits the administrative burden as much as possible.

Operational impact (£m) (HMRC or other)

HMRC expects to incur resource costs of approximately £450,000 a year as a result of administering the relief.

Other impacts

Competition assessment: this relief is targeted at a particular sector. All companies in this sector will be eligible, so the policy’s introduction is unlikely to affect competition within the sector. There should not be any significant impact on competition with other business sectors.

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups. HMRC will monitor this measure through the analysis of claims data and the publication of summary statistics.

Further advice

If you have any questions about this change, please contact Kerry Pope on Telephone: 03000 585740 or email: kerry.pope@hmrc.gsi.gov.uk.