Museum Tax Relief: Income Up 37% for Claiming Organisations

Cultural organizations in the UK are experiencing a significant financial boost thanks to tax relief initiatives, according to a new independent review commissioned by Arts Council England (ACE). The report, published recently, reveals that museums and galleries claiming Museums and Galleries Exhibition Tax Relief earn 37% more income annually – an average of £44,200 per organization – compared to those that don’t.

The tax relief, initially introduced in April 2017, offered 20% relief for touring exhibitions and 25% for non-touring ones. These rates were temporarily increased during the COVID-19 pandemic to 45% and 50% before being permanently set at 40% and 45% in 2024. The review demonstrates a clear correlation between utilizing these tax benefits and increased financial performance.

Beyond overall income, the report highlights a substantial increase in international activity for organizations claiming tax relief. These organizations earned 162% more income from international ventures, averaging an additional £16,500 annually. This suggests the tax relief isn’t just bolstering domestic operations but also facilitating broader global engagement.

The benefits extend beyond financial gains. Museums and galleries claiming the exhibition tax relief are able to host an average of six more exhibitions each year, both touring and on-site. Organizations participating in the research also reported an increased ability to offer concessionary tickets – 3.8% more of total tickets sold or given, equating to an additional 32 concessionary tickets annually. Respondents agreed that the tax relief positively impacted their financial resilience and staffing levels, allowing them to increase international touring dates.

The report doesn’t stop at simply documenting the positive effects; it proposes further enhancements to the scheme. A key recommendation is to broaden the definition of “qualifying costs” to include exhibition running costs, such as wages for temporary staff or increased hours for existing front-of-house, marketing, and operating personnel. ACE estimates this expansion could lead to an average of 29 more exhibitions and displays, attracting 322,800 more visitors and generating an additional £729,000 in income. It would also provide a boost to freelance employment and staff pay.

Data released by the Office for National Statistics last year shows that museums made 270 claims for a total of £28 million in the 2023/24 financial year. The claims were heavily weighted towards smaller amounts, with 31% being for £25,000 or less. While only 13% of claims exceeded £200,000, these larger claims accounted for 54% of the total relief paid out, indicating that a relatively compact number of organizations are receiving the bulk of the financial benefit.

To qualify for Museums and Galleries Exhibition Tax Relief, organizations must meet specific criteria. A qualifying company needs to maintain a museum or gallery and be either a charitable company or one wholly owned by a charity or local authority. Primary production companies – those actively involved in planning, decision-making, and directly contracting for the exhibition – must make a significant creative, technical, or artistic contribution. Secondary production companies, responsible for running the exhibition at specific venues, must be actively engaged in decision-making related to those venues.

A qualifying exhibition is defined as a curated public display of an organized collection of objects or works considered scientifically, historically, artistically, or culturally interesting. It can even consist of a single object. However, at least 25% of core costs (those spent on producing and potentially uninstalling the exhibition) must be incurred within the UK or the European Economic Area, with a minimum of 10% relating to activities within the UK as of April 2024. Exhibitions organized in connection with competitions, held online, or including live performances (except where incidental) are ineligible, as are displays of items for sale or living organisms.

For touring exhibitions, the criteria are more stringent. The exhibition must be held at multiple venues, with at least 25% of the objects displayed at the first venue appearing at all subsequent locations. There must be no more than six months between uninstalling at one venue and installing at the next, and a primary production company within the charge to Corporation Tax must intend for the exhibition to tour from the initial planning stages.

The findings of this report underscore the importance of cultural tax relief schemes in supporting the UK’s museums and galleries. By incentivizing investment in exhibitions, the government is not only fostering cultural enrichment but also driving economic growth and bolstering the financial stability of these vital institutions. The proposed expansion of qualifying costs could further amplify these benefits, potentially unlocking even greater opportunities for creativity, innovation, and public engagement.