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At Budget 2016, George Osborne announced that the Government would be introducing a new relief for temporary and touring exhibitions. As a next step, the Treasury issued a consultation, outlining the basic framework and seeking feedback on whether the proposals would achieve the Government's aims – the principal one being to encourage museums and galleries to produce more touring and temporary exhibitions.

The key features of the relief will be as follows:

  • to qualify, an institution must be a "museum" or "gallery", as defined;
  • it will be in the form of a deduction for the purposes of corporation taxes, which can be surrendered for a payable tax credit in the event of a trading loss. So institutions will need to be subject to corporation taxes to benefit from the relief;
  • it will be available for the creation and set-up costs of temporary and touring exhibitions, but not the day-to-day running costs of those exhibitions.

The Government intends to support the temporary and touring exhibitions of museums and galleries with charitable and educational objectives. To clarify the scope of these intentions, the consultation contains a number of definitions and descriptions:

  • museum: "a building or place devoted to the conservation, exhibition and educational interpretation of collections having scientific, historical or artistic interest";
  • gallery: "a building or place that is used for the exhibition and educational interpretation of a collection of objects having scientific, historical or cultural interest"
  • exhibition: "an organised and temporary display of a selection of works of art or items of interest held in a qualifying museum or gallery. The exhibition must be open and accessible to the general public". This is further clarified:
    - "temporary" means lasting no more than one year at a single location;
    - exhibitions with commercial aims (such as selling the works on display or using the works for promotional/advertising purposes) will not be eligible;
  • touring exhibition: an exhibition will only qualify as "touring" if there is evidence that, from the start of the planning phase, it was intended for display at various locations. Exhibitions that are displayed at two or more branches of the same museum or gallery will be eligible.

To qualify for the relief, expenditure must be directly linked to the creation and development of the exhibition (though, somewhat confusingly, the list of expenditure types that will qualify includes removal costs when an exhibition ends).

To claim the relief, organisations will need to provide details of the relevant expenditure in their tax returns. The consultation recognises that, because charitable galleries and museums are unlikely to pay corporation tax, they may prefer to claim through their trading subsidiaries. It points out that, for this to work, the trading subsidiaries will need to be directly responsible for producing the relevant exhibition.

The relief will be capped at the lesser of:

  1. 80% of core expenditure incurred in any country, and
  2. total core expenditure incurred in the EEA,

provided in either case that at least 25% of the qualifying expenditure was within the EEA.

The relief should be available from 1 April 2017.

The consultation ended on 28 October 2016, but you can still read the paper here. The Government plans publishing draft legislation later this autumn.

If you require further information on anything covered in this briefing please contact Rachel Holmes ([email protected]; 020 3375 7561) or your usual contact at the firm on 020 3375 7000. Further information can also be found on our Charities page.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, November 2016

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