Can museums and galleries claim R&D tax relief?

Industries making advances in science and technology are always ripe for potential research and development (R&D) tax relief claims – but what about museums and galleries?

Although these cultural institutions may not be eligible for R&D tax relief, Museums and Galleries Exhibition Tax Relief is available to reward technical innovation and company growth in the UK’s culture and heritage industry.

Therefore, if your client is pushing the boundaries of museum and gallery exhibitions in the UK, you may be able to claim back crucial funds in creative industries tax relief.

Museums and Galleries Exhibition Tax Relief

Museums and Galleries Exhibition Tax Relief (MGETR) is a creative tax relief that supports cultural institutions and incentivises creating and hosting new exhibitions.

MGETR enables museums and galleries to experiment more freely with their exhibitions, improve diversity, and promote innovation in the sector.

Who can claim?

Museums and galleries can claim cultural tax relief rates if they meet the minimum qualifying expenditure requirement within the UK and are qualifying primary or secondary production companies.

A qualifying company must:

• Maintain a museum or gallery.
• Be either a charitable company or a company wholly owned by a charity or local authority.
• Be liable for Corporation Tax.

The primary production company takes charge of a museum or gallery exhibition.

To qualify, the company must actively plan, produce, and run the exhibition, and make a creative contribution to it.

A primary production company is also responsible for negotiating contracts and paying for services.

There can only be one primary production company for an exhibition.

If the exhibition is held at two or more venues, there may be secondary production companies that are responsible for producing and running the exhibition at a venue. There may be more than one secondary production company in relation to an exhibition.

A specialist R&D tax consultant can help you determine if your company is eligible to claim creative tax relief.

What is a qualifying exhibition?

To qualify for MGETR, an exhibition (a curated public display of an organised collection of objects or works) must be considered to be of interest scientifically, historically, artistically, and/or culturally.

An exhibition can be a single object, but it must have at least 25 per cent of core costs spent on goods or services that are provided from within the UK or the EU, Norway, Iceland and Liechtenstein, known as the European Economic Area (EEA).

From 1 April 2024, at least 10 per cent of core costs must relate to activities in the UK.

Core costs are those spent on producing the exhibition and uninstalling and closing the exhibition if it is open for one year or less.

Additionally, HM Revenue & Customs (HMRC) lists the following additional requirements for touring exhibitions:

• The exhibition must be held at more than one venue
• At least 25 per cent of the objects or works displayed at the first venue must be displayed at every subsequent venue.
• There should be no more than six months between uninstalling at one venue and installation at the next venue.
• There must be a primary production company for the exhibition, which is within the charge to Corporation Tax.
• The primary production company must intend from the planning stage that the exhibition will be touring.

Exhibitions that are organised in connection with a competition, online exhibitions, and exhibitions including a live performance by any person (except where this is incidental) are not eligible for MGETR.

Qualifying exhibitions also cannot display anything that is for sale and/or alive.

randd uk’s expert tax relief specialists can help accountants understand whether an exhibition qualifies for MGETR.

How much relief can museums and galleries claim?

MGETR enables museums and galleries to claim an additional deduction to either reduce profits or increase a loss, thus reducing their Corporation Tax liability.

The value of the deduction is 80 per cent of the total core costs (capped at £500,000 per exhibition). However, the deduction can also be valued as the amount of core costs on goods or services provided from the UK, if this value is lower.

You can also surrender loss for tax credits, at a rate of 40 per cent for non-touring exhibitions and 45 per cent for touring exhibitions.

Our specialist R&D tax consultants will provide you with everything you need to maximise your client’s claim.

How to claim Museums and Galleries Exhibition Tax Relief for your client

Accountants looking to claim tax relief for their museum and gallery clients will need to do so on their clients’ Company Tax Returns.

You will need to calculate the amount of additional deduction due to your client and any payable credit due.

From 1 April 2024, all claims must also be accompanied by an Additional Information Form (AIF). You must use this form to submit the necessary evidence to support your client’s claim.

Applying for MGETR can be challenging for accountants, since most lack the time or specialist knowledge to navigate the complexities of creative industry tax reliefs.

At randd, we offer accountants tax relief assistance with all aspects of the process, from preparing a robust claim to managing HMRC enquiries.

We have the experience and a proven track record in identifying exactly what qualifies for a creative industries tax credits claim.

Need help claiming tax relief for your museum and gallery clients? Contact our expert tax consultants today.

Adam Bointon