Two year extension of higher rates for theatre, orchestra, and museums and galleries exhibition tax reliefs
Published 15 March 2023
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This publication is available at https://www.gov.uk/government/publications/two-year-extension-of-the-higher-rates-for-theatre-orchestra-and-museums-and-galleries-exhibition-tax-reliefs/two-year-extension-of-higher-rates-for-theatre-orchestra-and-museums-and-galleries-exhibition-tax-reliefs
Who is likely to be affected
Companies claiming tax relief for theatrical productions, orchestral concerts and museum and gallery exhibitions.
General description of the measure
The government intends to temporarily extend the rate rises of three corporation tax reliefs that are collectively referred to as the ‘cultural reliefs’: Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), and Museums and Galleries Exhibition Tax Relief (MGETR) for 2 additional years.
The rate increase, originally expected to taper down from 1 April 2023, will continue for 2 years until 1 April 2025. The rates will then taper down from 1 April 2025 before returning to original levels from 1 April 2026. MGETR will sunset after 31 March 2026 and no expenditure after this date will be eligible for relief. Details of the rates that will apply are in the table below.
| Rate % | Current Rates | From 1 April 2023 to 1 April 2025 | 2025-26 | 2026-27 (and onwards) |
|---|---|---|---|---|
| TTR: non-touring / touring | 45 / 50 | 45 / 50 | 30 / 35 | 20 / 25 |
| OTR | 50 | 50 | 35 | 25 |
| MGETR: non-touring / touring | 45 / 50 | 45 / 50 | 30 / 35 | N/A |
Policy objective
The government intends to extend the current rate rise for the Cultural Reliefs for a further two years. This is intended as a temporary measure to continue to offset current pressures on these industries and boost investment in our cultural sectors
Background to the measure
The TTR was introduced by Finance Act 2014, with an effective date from 1 September 2014, OTR by Finance Act 2016, with an effective date from 1 April 2016, and MGETR by Finance Act (No. 2) 2017 with an effective date from 1 April 2017.
Rates for these cultural reliefs were temporarily increased from 27 October 2021 to help the sector in their economic recovery from COVID-19.
Detailed proposal
Operative date
This measure will take effect from 1 April 2023.
Current law
The current law is contained in Parts 15C, 15D and 15E of the Corporation Tax Act 2009.
Proposed revisions
Section 1217K of the Corporation Tax Act 2009 will be amended for TTR, section 1217RG of the Corporation Tax Act 2009 for OTR, and section 1218ZCH of the Corporation Tax Act 2009 for MGETR. These amendments will extend the increase to the rate of reliefs for three years as set out in the above table.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| — | -10 | -90 | -140 | -90 | -20 |
These figures are set out in Table 4.1 of Spring Budget 2023 as a package of measures called ‘Cultural reliefs: extend higher rates of the theatre, orchestra and museums and galleries tax reliefs for two years and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2023.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses. This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a positive impact on the approximately 1200 companies that claim TTR, OTR or MGETR on an annual basis, by providing a higher rate of relief for two additional years.
This measure is expected to have a negligible impact on business costs. One-off costs could include familiarisation with the change. There are not expected to be any further one-off or continuing costs. Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC. The measure is not expected to impact civil society organisations.
Operational impact (£m) (HMRC or other)
HMRC operational impacts for this change are expected to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This 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.
An external review of the MGETR was launched in 2020 and was published in March 2022.
Further advice
If you have any questions about this change, please contact Kerry Pope on Telephone: 03000 585740 or email: kerry.pope@hmrc.gov.uk or Stephanie Martinez on Telephone: 03000 519492 or email: stephanie.martinez@hmrc.gov.uk