In the context of ongoing uncertainty around cultural funding, the launch of a tax relief for museums and galleries is welcome news.
A tax relief will never replace funding, and specifications and limitations mean that it won’t apply to all institutions, but with claims of up to £100,000 available for touring exhibitions, it’s not to be overlooked.
Yet a recent survey of museums and galleries carried out by accountants and business advisers Scott-Moncrieff in conjunction with Arts & Business Scotland found that just 76 per cent of these cultural organisations are currently claiming the tax relief.
The Museums & Galleries Exhibitions Tax Relief (MGETR) recently came into effect and is applicable to projects back dated to 1 April, 2017. It builds on the success of tax reliefs for other cultural and creative industries such as film, animation, theatre and music.
With Scotland’s cultural sector encompassing many hundreds of non-profit arts and heritage bodies, many being small in size and located in regional locations, there is significant scope to utilise the tax relief for the benefit of the cultural sector.
The intention in launching the tax relief was to encourage the development of new exhibitions, to benefit the general public, and to support the touring of exhibitions.
Therefore exhibitions must not be for profit nor have the intention of promoting sales. Merchandise is fine, but price stickers are not.
At the same time, exhibitions qualifying for the relief needn’t be free; the public can be charged admission for entry.
HMRC has endeavoured to create a simple tax relief process and guidelines but naturally there is still uncertainty and misunderstanding over what is and isn’t included.
To be eligible, the museum or gallery must be charitable or run by a local authority. Organisations shouldn’t be put off by HMRC’s guidance which says that the tax relief only applies to companies; by definition, HMRC means ‘company’ in the body corporate sense.
In terms of what qualifies as an exhibition, HMRC encourages anything of cultural, artistic, historic or scientific significance. However, it must not include any live elements. This includes anything from plants and animals to live human performances.
There are exceptions if the live aspect is incidental to the exhibition; for example, a re-enactment at a heritage site where visitors have come to see the historical exhibition itself rather than the performer or performance.
Scott Moncrieff has advised that organisations can claim for expenses related to the production and deinstallation of the exhibition. Indirect expenditure such as marketing fees, storage, and the purchase of exhibits cannot be claimed. Up to 25 per cent can be claimed for touring exhibitions and 20 per cent for non-touring exhibitions.
HMRC went through extensive consultation with museums and galleries in the development of the policy, but there is still room for improvement. For example, it is unclear how the rule that the exhibition can’t involve a competition will affect galleries and museums showcasing the work of award-winners, or whether it will impact the competitive process that galleries undertake when selecting artists to exhibit. Also, arts and heritage charities who organise and fund exhibitions in partnership with museums and galleries but do not maintain their own exhibitions may find they are not eligible.
However, it is a step in the right direction to support the financial status of museums and galleries in line with other cultural and creative industries, and the efforts of HMRC to develop an inclusive and user-friendly tax relief should be acknowledged.
Arts & Business Scotland strongly supports the efforts of HMRC to encourage the development of new and innovative exhibitions in Scotland, and to increase public access to such programmes.
Together with Scott-Moncrieff, we strongly encourage all museums and galleries across Scotland, no matter how small or remotely located, to explore their eligibility.
David Watt is chief executive of Arts & Business Scotland