Research and analysis

Tax relief for museums and galleries: qualitative research

Published 31 March 2022

Qualitative research with exhibitors.

HM Revenue and Customs (HMRC) Research Report 642.

Research conducted by Ipsos MORI in March 2021. Prepared by Ipsos MORI (Kimberley Rennick, Stephen Finlay) for HMRC.

Disclaimer: The views in this report are the authors’ own and do not necessarily reflect those of HMRC.

1. Executive Summary

The findings in this report reflect the policy and attitudes of participants at the time it was conducted, November and December 2020.

1.1 Background to the Museums and Galleries Tax Relief

The Museums and Galleries Tax Relief (MGTR) was made available from 1 April 2017. The relief allows eligible museums and galleries to claim back a percentage of their exhibition production costs. Organisations can claim up to £80,000 on qualifying static exhibitions, and up to £100,000 for qualifying touring exhibitions. The relief aims to encourage the creation of more and higher quality exhibitions, as well as to support touring of the best exhibitions across the country and abroad. The relief was introduced with a sunset clause and is due to expire in 2022.

1.2 Background to the research

This research aimed to provide an industry-wide view of the impact of the relief. It also aimed to draw out the experiences of individual organisations, including:

• the positive impacts the relief has had
• barriers to uptake
• an exploration of why non-claimants are not claiming

The main stage of research comprised a total of 35 in-depth interviews carried out with organisations that were eligible for MGTR. Of these, 20 had claimed the relief and 15 had not. To reflect the diversity of the museums and galleries sector, the sample included organisations across a range of sizes and funding models. All interviews were conducted by telephone between 10 November and 15 December 2020.

1.3 Impacts of MGTR

The introduction of MGTR was greatly welcomed, by claimants of all sizes and types. The much needed opportunity to increase budgets was the key determining factor in the decision to claim. Awareness of the tax relief, understanding of eligibility and the process, and motivation to complete the claim were also important factors. Organisations typically stood to benefit considerably from the tax relief, so often the decision to claim was described as a “no-brainer.”

Where organisations had strong networks within the industry and knowledge or experience of how tax relief works, this led to greater awareness and understanding of MGTR. In turn this meant they were more confident and better equipped to apply. Where organisations had senior management that were engaged with the relief and aware of the benefits, they helped to steer teams and gave them a greater motivation to apply. Likewise, teams were more motivated to apply when they were equipped with relevant financial knowledge and capacity.

Claiming MGTR enabled organisations to increase the number of exhibitions they show, as well as increase the quality of their exhibitions. It also enabled some organisations to increase touring of their exhibitions. Furthermore, the tax relief had an impact at an organisational level, enabling future investments including upgrading infrastructure, hiring and retaining more staff, and accessing other opportunities for funding. It also enabled organisations to develop their community engagement programmes, including work with youth and schools – a key area for the future.

The money gained from the tax relief scheme is unrestricted, in that organisations have free rein to spend it as they see fit. This was reported to be a very valuable aspect of the relief, as most other sources of funding are restricted, meaning organisations often struggle to fund things that they cannot access specific funding for. In this way, MGTR enabled them a greater degree of financial freedom and organisations have been able to focus the money on areas that will have the greatest impact for them. This research has evidenced great potential for impacts across the sector and beyond, including for local communities. To some extent, these are already being realised. However, research participants suggested that due to the slow uptake of the relief and the long lead time involved in planning exhibitions, the full impacts will take some time to be seen. This delay has also been exacerbated by the Covid-19 pandemic.

1.4 Barriers to claiming MGTR

The ease with which organisations accessed information varied. This was in part because available information was deemed too complex for those without finance training, and partly because there was a huge disparity in knowledge and understanding between the agents they engaged.

Moreover, the findings of this research suggest that the name of the scheme was confusing for a sector where a vast number of organisations do not pay tax, and consequently do not consider tax reliefs to be relevant to them. Those with limited financial experience, particularly some smaller organisations, were less well equipped to make a claim. Organisations would welcome clearer information around eligibility and the application process and would like to access this directly from HM Revenue and Customs (HMRC), financial agents or through other communication sources that they already engage with. Participants noted that it is vital that information is presented in a format accessible for those without finance training and that it is clear that paying corporation tax is not a prerequisite to making a claim.

Other barriers to claiming included the complexity of the process, which was difficult for less experienced organisations to navigate. In some cases, organisations would have needed to make structural changes in order to claim, such as setting up a subsidiary company through which to process the relief. This was not always financially worthwhile. Likewise, if exhibition expenditure was low, organisations believed that they did not stand to claim enough to make the process worthwhile. Some participants expressed a feeling that the criteria for eligible exhibitions was somewhat restrictive as it did not include some more novel and innovative approaches, such as installations works that may involve people as part of the exhibition, though not necessarily in a performative capacity.

Across the organisations that took part in the research, participants made suggestions for improving MGTR and increasing uptake. Key suggestions included increasing awareness of the scheme and eligibility criteria, simplifying the process for applying and removing the sunset clause.

2. Introduction

2.1 Background

The Museums and Galleries Exhibition Tax Relief (MGTR) is one of eight tax reliefs designed to encourage investment into the UK’s creative industries. These reliefs aim to support sectors that previously struggled to finance new ventures. The UK government announced its intention to introduce a new tax relief for temporary and touring exhibitions in the 2016 Budget. Following a public consultation, the scope of the relief was broadened to include permanent exhibitions and the relief was made available from 1 April 2017. The relief allows eligible museums and galleries to claim back a percentage of their production costs. By doing so the relief aims to ‘encourage the creation of more and higher quality exhibitions, as well as to support touring of the best exhibitions across the country and abroad, raising the UK’s profile internationally’. Unlike the other creative industry tax reliefs, MGTR has a sunset clause, and it is due to expire in 2022.

2.2 Research Aims

This research aimed to provide an industry-wide view of the relief’s impact. It also aimed to draw out the experiences of individual organisations, including awareness and understanding of the relief, and the positive impacts the relief has had, as well as barriers to uptake and an exploration of why non-claimants are not claiming.

2.3 Method

An initial scoping phase was carried out, comprising six interviews with sector stakeholders. These were drawn from a list provided by Her Majesty’s Revenue and Customs (HMRC). The aim of the stakeholder interviews was to deepen our understanding of the sector, including the distribution of different types and sizes of museums and galleries. These interviews provided context around the key research questions and helped to shape the research materials and analysis framework.

The mainstage of research comprised a total of 35 in-depth interviews carried out with organisations that met the criteria to be eligible for MGTR. Members of staff were recruited on the basis that they had involvement in the financial affairs of the organisation and would be responsible for dealing with tax reliefs or similar schemes. Where possible, they also had some sight of exhibition planning. Of the organisations that participated, 20 had claimed the relief and 15 had not. All interviews were carried out by members of the Ipsos MORI research team between 10 November and 15 December 2020. Interviews were conducted by telephone and were around 45 minutes in length.

2.4 Sample

The focus of the research was two-fold. It was important to capture those who had claimed the tax relief, as they would be able to shed light on their experience of the process and impacts for their organisation. On the other hand, it was essential to speak to those who had not claimed the tax relief, in order to understand the factors contributing to this decision.

A sample of claimants was provided by HMRC. For non-claimants, the sample was derived from multiple sources, comprising lists from the Art Council England and Creative Scotland, as well as a list compiled by Ipsos MORI desk research. Using multiple sources enabled us to create a comprehensive and balanced sample, reducing bias associated with a single source or list, and allowed us to capture organisations that are not engaged with sector contacts. Within these two samples, quotas were set for a range of criteria to ensure we included a good mix of museums and galleries, in terms of size, and type. The metric used to classify size of organisation was number of visitors per year^{[footnote 1]}.

3. Findings

3.1 Understanding the wider context

Background to the museums and galleries

The Museums and Galleries sector is extremely diverse, encompassing organisations of varying size and structure, and utilising a range of funding streams. Our sample was built to reflect this diversity, including National and Regional organisations, as well as Independents, Local Authorities and Universities. Some of the larger organisations that we spoke to had millions of visitors per year, while smaller ones had under 10,000. Some had fewer than 5 members of permanent staff, while the largest had around 500. The number of visitors did not always correlate with the number of staff. For instance, one independent museum had less than 10 members of staff but over 50,000 visitors per year. This meant that some organisations that were classified as “large” in terms of visitors operate as and face similar challenges to smaller organisations.

Organisations also varied in terms of the types of exhibitions they put on, and whether these were solely static or touring as well. Larger organisations were more likely to tour, and more frequently. Some of these organisations had increased touring in recent years.

Funding sources and sustainability

The organisations typically utilised multiple funding streams, with some relying heavily on external funding. External funding sources included local authority and government grants, and industry grants. In some cases, industry grants were ad hoc and applied to specific exhibitions, whereas others were a more regular, stable source of funding. For regular funding from an industry body, organisations needed to demonstrate consistently high standards, and this funding tended to be restricted for spending on specific things.

“The thing about that regular funding money is that in order to keep it going we have to make sure that what we provide is of a consistently high standard, so it does keep you on your toes a little bit, but it also gives you a bit of stability.”

Claimant, Medium, Regional

Many organisations also raised some of their own funds – and in a few cases, they were almost wholly self-funded. Funding streams included trade through gift shops and cafes, as well as charitable fundraising. Some organisations also supplemented their income by hiring out their premises for conferences and events, or for regular activities including art classes.

Organisations of all sizes and types reported a decrease in some of their sources of external funding over recent years. This included a decrease in local authority and central government grants, as a result of wider cuts and austerity measures. Alongside this, they had seen an increase in exhibition costs. In particular, it was noted that freight and storage costs had increased, with increases compounded by inflation. Consequently, organisations had felt it necessary to seek additional income streams. Many had taken steps to increase their reliance on their own fundraising streams, though this was not always enough to make up for the shortfall.

“We might be earning more money but it’s not enough to meet that increase in costs for putting on exhibitions.”

Non-Claimant, Medium Independent

In addition, organisations have seen their revenues squeezed as a result of the Covid-19 pandemic. For instance, those who usually earn money through shops and cafes, or through hiring out venues, have not been able to do so for much of 2020.

Understanding the exhibition context

Reflecting the diversity of the organisations surveyed, the exhibitions they put on differed considerably in magnitude and complexity. It could take anywhere from a few months to several years to plan an exhibition – this variation was sometimes seen even within the same organisation.

“Anything from six years - so an exhibition that’s going in next year has been in the works for six years - to probably I’d say three months is the shortest turnaround.”

Non-Claimant, Large, Local Authority

However, there was a consensus across the sample, that exhibitions typically take at least a year, and more often 18 months or two years to plan. Therefore, organisations would often be planning their financial resources around two years in advance.

“Well, it takes at least two years to plan an exhibition, so we have an exhibition programme which is two years out, so at the moment we’re looking for 2023 exhibitions.”

Claimant, Medium, Regional

Despite the variation in time taken, the planning process generally followed the same structure for all exhibitions. This process began with the creative task of deciding on a theme. At this stage, organisations would engage any artists or industry partners that would be needed. This would allow them to start putting together costs, creating a budget and applying for grants if needed. They would then turn to the more practical elements – identifying, gathering and displaying the objects to be exhibited, as well as starting to advertise. Finally, they would start to sell tickets (if a ticketed exhibition) and the exhibition would open. Promotion and marketing activities would continue upon opening.

Obstacles to putting on exhibitions

Organisations across the board faced similar types of obstacles, primarily relating to funding, staff capacity and practicalities. However, these were most impactful for those with less fixed funding.

Funding

Many participants said that obstacles relating to securing funding have increased over recent years due to government cuts. The key financial obstacles identified focused on grant requirements and access to grants. Grants often include the requirement that some money must be spent on specific areas such as outreach work. Participants reported this can be difficult to fulfil, especially for those organisations with small teams, as they can struggle with the capacity to conduct this work.

Furthermore, participants reported grants generally do not cover all costs for an exhibition, so organisations need to identify multiple sources of income in order to fund an exhibition. Participants found that overheads in particular, could be difficult to fundraise for as they are often not covered by grants and are typically thought of as “less exciting.” Often grants may require a demonstration from the applicant that they are able to raise the remaining funds. Participants explained that this means their organisations need to secure other sources of income before they can apply for grants.

“There was an expectation that the charity could raise matched funding, mainly from corporates to pay for the other part of the costs: the building and staff, which are the non-exciting parts of the exhibition. Of course, nobody wants to fund a staff member or rent, they want to fund the exhibition.”

Claimant, Medium, Independent

Staff capacity

Those with smaller teams found that the time-consuming nature of putting on exhibitions could pose a challenge as this put a lot of pressure on staff capacity.

Practicalities

In some cases, transport and storage of the artefacts to be displayed could be a challenge. For instance, certain kinds of artworks and photographs needed to be kept at a specific temperature or humidity.

“[Exhibitions] can be very, very expensive, particularly when you’re importing stuff from other countries…they’ve got to be sent in a specific manner and also sometimes you have to keep the photographs at a certain humidity.”

Claimant, Medium, Regional

In addition, no matter how carefully scoped and planned, there was always some element of uncertainty as to how an exhibition would be received and what the footfall would be.

3.2 Finding out about MGTR

This section explores how participants came to be aware of MGTR, and where and how they sought further information.

Initial awareness

There did not appear to be one primary source of information that was universally accessed across the sector. Rather, organisations had initially heard about MGTR from a variety of different sources, most notably from industry contacts and financial agents. Industry bodies were identified as key sources of information - many organisations of all sizes belonged to mailing lists that meant they received regular communications from these types of organisations and they were felt to provide a good introduction to MGTR.

“I can’t remember a big fanfare about it - I just happened to be on the right mailing list.”

Claimant, Large, Independent

Some participants, or others from their organisation had attended industry events or webinars where they had been introduced to MGTR. Participants found these events particularly valuable, as it gave them an opportunity to hear directly from a HMRC representative and ask any questions if they were unsure about eligibility or the process.

“[The briefing was] quite amazing, quite clear.”

Claimant, Large, Independent

Some participants had also been able to get a template from the event, that showed them exactly what they needed to input to complete a claim. Some larger organisations had heard about the relief in advance through their industry contacts, which gave them a head start to begin looking for more information. Others had been involved in the initial consultation and were therefore quite familiar with the relief by the time it became available.

Other organisations heard of the tax relief from their agents including accountants or tax advisors who recommended that they pursue it. This tended to be larger organisations.

Accessing further information

Organisations sought further information about MGTR through the HMRC website, industry bodies and external agents, but the ease with which they accessed information varied.

Where participants had accessed the HMRC website to search for further information about MGTR, they had mixed success in finding what they wanted. While some described the information as useful, others felt that it was inaccessible due to being too complex.

“The lack of summary information, it was very, very in-depth and for every aspect there was so much of it. That was really off-putting to dig deeper and find out more.”

Claimant, Large, Independent

Moreover, some reported that the information available on the website did not provide them with practical steps of what to do next. Where organisations had sought further information from external agents, their ability to do so was dependent on the knowledge and expertise of those agents. Some external agents were highly knowledgeable about the scheme, and were instrumental both in advising organisations to apply, and in completing the process. In some cases the agents themselves had attended industry events or had communications with HMRC.

“We have two accountants who are brilliant, and they got invited to a seminar that was being run in Edinburgh by, I think it was a legal firm, where they were actually talking about the launch of the scheme. So, they came back from this session full of, ‘This is an opportunity you really do need to pursue’, and so they were key to us actually making the application.”

Claimant, Large, Local Authority

On the other hand, there were other agents who had very little awareness of the scheme and therefore were not in a position to equip organisations with the information they needed.

“The accountants we use, who ultimately have been officially applying for it, hadn’t been briefed on it - so it ended up with me/us briefing them and they didn’t get the same briefing as we got directly.”

Claimant, Large, Independent

While this was the case even among some larger organisations, it seemed to be more common amongst smaller ones. In at least some cases, smaller organisations used agents that worked across a range of sectors rather than being focused primarily on museums and galleries. It was suggested that these agents may be less knowledgeable about developments in the museums and galleries sector, including about MGTR.

Industry bodies were once again identified as a source of further information. Some organisations found additional information from industry bodies to be really useful. For instance, YouTube videos that were found through an industry body website explained how to submit a claim, and these were noted as being especially helpful and practical. Nonetheless, depending on the complexity of their claim, the additional information available from industry bodies was not always enough. For example, where there was a query about eligibility, participants were sometimes unable to find the answer. Where they were unable to confirm their eligibility, this meant that they did not go on to claim.

3.3 Reasons for claiming

The introduction of MGTR was greatly welcomed, by claimants of all sizes and types. They perceived the tax relief to be a significant opportunity for them to increase their revenue and consequently to bring about positive impacts for their organisations. In light of other reductions in funding, and increases in costs, this was felt to be a much needed opportunity.

“With the LA funding reducing …this un-ring-fenced income, a relatively large chunk, it’s very nice to know it’s coming. It takes the pressure off.”

Claimant, Independent, Large

Organisations typically stood to benefit considerably from the tax relief, so often the decision to claim was described as a “no-brainer.”

“There doesn’t seem to be any downside to it. We thought ‘great’, it’s something that can help fund the exhibitions. We were pleased about it.”

Claimant, Regional, Medium

While the opportunity for increased income was the key motivating factor for claimants, they also needed to have a certain level of knowledge in order to successfully pursue a claim. If they stood to benefit financially and they had enough knowledge to be able to pursue a claim, this tended to outweigh any other considerations. Simply put, organisations were willing to put the time and effort in to apply for the benefit that they would gain.

“It’s such a significant amount of money, there’s no way you wouldn’t make a claim.”

Claimant, Regional, Medium

Where organisations had strong networks within the industry and knowledge or experience of how tax relief works, this led to greater awareness and understanding of MGTR. In turn this meant they were more confident and better equipped to apply. Where organisations had senior management that were engaged with the relief and aware of the benefits, they helped to steer teams and gave them a greater motivation to apply. Likewise, teams were more motivated to apply when they were equipped with relevant financial knowledge and capacity. These attributes were more commonly, though not exclusively, observed in larger organisations.

3.4 The process of claiming

The process of claiming started during exhibition planning, and the claim was received the following financial year. Claimants tended to claim for all exhibitions that were eligible, unless exhibition expenditure was so low as to make a claim not worthwhile. They would begin gathering the relevant data as soon as they had made the decision to claim, early on in the planning process. They would then complete the forms, and the claim would be submitted at the end of the financial year, with the money received in the subsequent financial year.

Good administrative systems and clear guidance made the application process easier

The more accurate records were, the easier organisations found it to complete the claim, due to the need to work out what expenses relate to which exhibitions and whether or not they were eligible. This was the same for all types of organisation – but those who already did tax returns were more likely to already be recording the relevant information.

Some organisations had been able to access a spreadsheet template for inputting relevant information and costs. They had got this from the communications from industry bodies, from industry events they had attended or directly from HMRC. This template was generally found to be very useful as it enabled organisations to see clearly what they needed to include in a claim. However, there was also a suggestion that the template from HMRC seemed to be more suited to very large organisations as some others felt the template was not designed for them and it was too big and unwieldy, with parts that did not apply to them. Though they still used it, they found that they had to alter parts of it. Some organisations who had not accessed an official template, had designed their own instead.

Once organisations had been through the process, they tended to find subsequent applications quicker and easier as they were more confident about what they were doing and had better record keeping in place. Equally those who already completed tax returns, or who had claimed other kinds of tax relief, benefited from this experience. Assistance from experienced agents had a similar effect.

“I have a solid background in accounting so I don’t have a problem pulling the information together, but I think other arts organisations might need more support from an accountant.”

Claimant, Small, Local Authority

Case Study: Previous experience with similar schemes and good support from financial agents facilitated a straightforward application

Background: Organisation A is a large, independent museum, that is almost wholly self funded. The participant heard about the tax relief through one of their trustees, who had extensive knowledge from working with other museums.

Experience: The participant had been involved in claiming theatre tax relief in their previous job so already had an understanding of how these schemes work – this gave them the confidence to know what they were doing. They had support from their financial agent who submitted the final claim – this also helped to ensure the process went smoothly.

“It was relatively straightforward but helped by the fact I’d worked with the theatre tax relief which is similarly structured.”

Claimant, Large, Independent

The complexity of the forms, and lack of capacity made the application process difficult for some organisations, particularly for smaller ones

Prior to claiming MGTR, many organisations reported not needing to separate staff costs relating to exhibitions and other work, so they needed to change their record keeping practices in order to complete the claim accurately. This affected organisations across the board – it really depended on how well suited their accounting systems were and what records they kept.

Without a clear template, organisations struggled to ascertain what needed to be included. This affected small and medium organisations more as they were less likely to be familiar with these types of forms or have finance personnel to call on.

Moreover, the process was found to be time consuming – especially the first time around, and organisations needed to find capacity for this, which was a challenge for some. This was a greater issue if they lacked experience with these kinds of claim, and if they did not have dedicated finance personnel.

Case Study: Inaccessibility of information and a complicated form made the process difficult

Background: Organisation B is a medium regional gallery, that is mostly self-funded, in receipt of a small grant from the council. The participant had heard about the tax relief from their predecessor when they started their job. They searched for information on Gov.uk but were unable to find what they needed.

Experience: They managed to find some information on an industry body website but finding the relevant forms to complete was very difficult. The first year the claim was completed by their financial agents but for financial reasons, they have done it themselves since then and found it a struggle. After submitting the claim HMRC sent them the MGTR breakdown expense stencil to complete. They found this very difficult because the sheet was complex and seemed to be designed for a larger organisation. They had to make modifications in order to include the required detail.

“It is complicated - there is no way I could have done it without having sight of what the accountants had done.”

Claimant, Medium, Regional

3.5 Impacts of MGTR

Impacts for exhibitions

Claimants reported that the tax relief had had considerable positive impacts on their exhibition programmes. As the tax relief was claimed retrospectively, it did not affect the actual exhibitions that it was claimed for, but impacts were seen in subsequent financial years, and on subsequent exhibitions. The tax relief allowed organisations to curate more, and higher quality exhibitions, and tour more.

[MGTR has] “Given us the oxygen to do more.”

Claimant, Large, National

Organisations were clear that they would prioritise the quality of their exhibitions regardless of whether they were receiving the tax relief. However, the additional money enabled them to raise their standards even more for future exhibitions, as they were able to procure more expensive objects and add other features such as interactive elements.

“It means that we’ve got additional resources going forward, to improve our exhibitions.”

Claimant, Large, Local Authority

By enabling them to tour more, the MGTR also helped organisations to expand their reach and raise their profile. Likewise, the scheme meant that some organisations had the funds to put on more exhibitions, which helped them to attract new audiences, raise their reputation, and employ more people.

“Inevitably, the extra money means that we’re doing more exhibitions, which means that we’re employing more people and spending more on local economy.”

Claimant, Large, National

Furthermore, with more flexibility in their budgets, some smaller organisations felt able to take creative risks, and be bolder in the kind of exhibitions that they curated. This was an important impact for these organisations, as innovation and risk taking is a crucial way that the museums and galleries sector remains fresh and maintains public interest.

Impacts for organisations

The tax relief added much valued income to budgets, allowing organisations to make changes beyond their exhibition programme, but this was weighed against other funding losses. Having a bit more money in their budgets gave organisations more financial security, and in some cases made the difference between operating at a loss and having a surplus.

“Fundamentally it changes us from a deficit to a surplus every year. I would say it’s preserved at least two jobs.”

Claimant, Independent, Large

The additional income was perceived to be particularly valuable because unlike much of their other funding, it was unrestricted. This meant that organisations could use it on what would be most useful to them at the time.

“We’ve been looking at other different income streams, but this is bigger, and not ring-fenced like income from certain funders, so we can flex it to whichever project we wish.”

Claimant, Large, Independent

For some, this included upgrading their infrastructure – an investment for the future, and something that would enable them to curate more, and higher profile exhibitions going forward. Hiring more staff, such as a front of house co-ordinator, was also prioritised by some organisations. This meant that existing staff were less stretched and led to greater staff retention. The additional capacity also helped some organisations to focus on and improve the experience for their visitors.

Community engagement was another important area of work that was positively impacted by the tax relief. The additional income had enabled some organisations to further develop their community engagement programmes, and engagement work to support and complement their exhibitions.

“Has this money made a huge difference [to community engagement]? I would probably have to say yes, because it’s given us more opportunities to bring in artists, artist talks, to support exhibitions.”

Claimant, Large, Local Authority

Youth and schools programmes were a key part of community engagement that benefited from the relief. These were identified as follows:

“It just allows the producer of that project to do more work with our youth programme than they would otherwise be able to. That’s where a fair chunk of it went. That on-the-ground work with the community makes a difference.”

Claimant, Large, Independent

Having the tax relief as a source of income also helped some organisations to access more grants. This is because grant applications often require applicants to demonstrate other sources of funding.

“The [industry body] won’t fund 100% of it, they expect an organisation to have other funding sources to support the application […] so as part of this package of matched funding that we had to demonstrate, this tax rebate supports that, so it’s really important as part of that application process.”

Claimant, Medium, Independent

However, some organisations often needed to balance the additional income received against other funding cuts and increases in costs. In this respect, MGTR helped to replace some of those losses and some saw the relief as an essential source of funding just to be able to continue producing the quality of output they were used to.

“We are really relying on it as an income source to deliver our programme.”

Claimant, Large, National

Case Study: Improving exhibition quality and ability to exhibit high profile new work

Background: Organisation C is a large, local authority museum. They receive just over half of their funding from an industry body, with the remainder being comprised of their own fundraising and trade activities. They became aware of the tax relief from their agents, who had attended an industry seminar about the scheme.

Experience: The tax relief has enabled them to spend more on artist fees and production values – thereby allowing them to curate better quality exhibitions. They are currently investing some of the tax relief in upgrading their environmental monitoring system.

“We weren’t able to get [a specific exhibition] because of the insufficiency of our environmental monitoring system. So, we’re currently working on getting that upgraded. So it means that we’re able to put some money from that award into upgrading that, so that has a consequent impact on the types of exhibitions that we’re able to attract in, and you can imagine, a [specific exhibition] would have be, you know, really quite transformative for us.”

Claimant, Large, Local Authority

Impacts for the sector

While organisations did not always feel qualified to draw specific conclusions for the sector, they certainly saw the potential for MGTR to be hugely beneficial. In particular, where they had experienced considerable financial benefit, some suggested that this extrapolated across the sector would have an enormous impact. Similarly, they felt that the increased community engagement work they had been able to deliver, would have a wider impact beyond their organisation. Moreover, there was a feeling that the introduction of MGTR was an acknowledgement of the cultural and economic importance of exhibitions in the UK.

“It’s recognition that the UK actually does do exhibitions really well.”

Non-Claimant, Large, Local Authority

Some also described a “halo effect” whereby the work they had put on as a result of MGTR then had a knock-on effect of increasing general interest in the sector, as well as bringing in more tourism to their local area in what would otherwise be a quiet time of year.

“Most art doesn’t generate a return off its own back. It has a halo effect. When we put [exhibition] on in London, part of what we were able to do was generate a massive footfall in London at the end of January.”

Claimant, Large, National

Participants estimated that this halo effect provided a return for the community, significantly greater than the cost of the exhibition.

“A huge virtuous circle that goes well beyond us when great art is allowed to flourish.”

Claimant, Large, National

Nevertheless, organisations perceived that take up of the scheme had been relatively low and expressed concerns that the sector wide impacts may not yet be as great as they had the potential to be. This was due both to the newness of the scheme and the fact that they believed takeup had been quite slow. This combined with the long lead time for exhibitions and the additional time taken to claim and receive the money, meant that organisations had not yet seen the full impact that the relief could have. Furthermore, the delay in impacts being realised has been exacerbated by the Covid-19 pandemic. Covid-19 has had a huge impact on the museums and galleries sector, with them being closed for significant periods during 2020.

Potential impacts – from the perspective of non-claimants

Some non-claimants noted that without knowing how much they could receive, it was difficult to speculate on the level of impact, but nevertheless they could see how the additional funding could benefit them.

Reflecting the findings from the claimants, some non-claimants also perceived the funding as particularly valuable because it was unrestricted. Areas where non-claimants felt that MGTR could have most significant impact focused particularly on things that would enable them to increase their reach and widen their audience base.

Innovation and marketing

Organisations recognised the importance widening their audience base and engaging younger people. They felt that increasing their marketing efforts and spending more money on innovation and trying new things such as immersive experiences, would be a good way to do this.

Improving accessibility

Translating exhibition materials into multiple languages and making them available in braille would also help to widen audiences by making exhibitions more accessible to more people.

Outreach

Outreach work such as school programmes were recognised to be a valuable future investment, and another way to engage others in their community. These were currently difficult to afford, so an additional source of income would be very useful for this. Where some organisations already do outreach work such as community education courses, they currently have to charge for these. MGTR could enable them to offer these free of charge, therefore making them more accessible.

In addition to widening their audience base, the unrestricted nature of MGTR meant that it could also be used for some of the more routine tasks that are essential, but difficult to find funding for. This included maintenance work such as upgrading buildings, improving facilities and improving websites.

3.6 Barriers to claiming MGTR

Knowledge and awareness were the biggest barriers to claiming MGTR - they prevented some organisations from claiming at all; and made things more difficult for those who did claim. Other barriers also included the administrative burden of the process, restrictions around which exhibitions could be claimed for, and for some, the costs of claiming exceeded the benefits.

Knowledge and awareness

Both claimants and non-claimants expressed a wish for clearer and more easily accessible information. Some claimants struggled with the complexity of the information available and the lack of summaries – this was highlighted as a particular issue if staff did not have specific finance training, as was often the case for smaller organisations and those with small teams.

“The lack of summary information, it was very, very in-depth and for every aspect there was so much of it. That was really off-putting to dig deeper and find out more… For other staff who don’t work in finance, they would just find it too much, too hard to understand all the different parts of it.”

Claimant, Large Regional

They therefore wanted a succinct summary setting out what they needed to do, in language that was accessible to those without a background in tax or accounting.

A notable information gap was clarity around who was eligible and what the eligibility criteria was. Some sought external advice on eligibility and what they could and could not claim for and in the case of claimants they were able to find this. However, even where they were able to get clarity on this issue, the process was time-consuming and could be frustrating.

“We took professional advice, and it became clear that we could claim it. It was difficult working out whether we were eligible or not.”

Claimant, Large, National

In the case of non-claimants, some had simply not been able to find the answers to their questions around eligibility and the process, meaning that they did not go on to claim. This was because those they consulted were not knowledgeable enough, either about the scheme, or their specific circumstances. This suggests that there is a lack of awareness about where to go for good, accurate information about MGTR.

Some organisations found that even though they had ascertained their eligibility to claim, there was further uncertainty regarding which specific costs could be claimed back. For example, where organisations were putting on exhibitions in partnership, they could struggle to work out which organisation could claim what. Once again, this was particularly an issue for smaller and medium organisations who were less likely to have access to tax experts. This was seen across both claimants and non-claimants, and indeed, in our interviews with claimants it appeared that they held varying beliefs about what could be claimed for. Some reported claiming for expenses that others had reported to be ineligible.

“[It was] unclear what costs you could claim back…we had to make up our own methodology of how to justify the claim.”

Claimant, Large, University

A particular sticking point was around staff costs, as it seemed that some were eligible for the relief while others were not. Participants found it very complicated trying to divide staff time into what could be claimed for and what could not, particularly as they did not generally complete timesheets. They also found it confusing that they could only claim for certain staff activities, even if the staff member was hired specifically to work on the exhibition in question. In one case, the participant had come up with her own heuristic, and assigned 10% of their salary as claimable.

For non-claimants, understanding what they could claim was an even more critical issue as they needed to weigh up how much they stood to benefit, in order to make a decision as to whether a claim would be financially worthwhile. Some participants therefore wanted clearer guidance around acceptable things that can be claimed for, and a clear process that would enable them to ask more complex or specific questions about their eligibility.

The name of the scheme led to some confusion

The reference to ‘tax’ in the name of the scheme, was confusing and off putting for some claimants and non-claimants who did not pay tax. Based on the description of “reducing corporation tax,” they mistakenly thought that they would need to pay corporation tax to be able to claim something back. Even those that did understand that they were eligible acknowledged that the name of the scheme was unclear and likely to deter those who were less knowledgeable.

“Lucky that the word ‘tax’ didn’t scare me - if you weren’t an accountant and you had an email about tax it would drop to the bottom of your pile.”

Claimant, Large, Independent

Non-taxpayers who did go on to claim had typically accessed information about eligibility from external agents and been reassured that they could claim. Or in some cases, they had previous experience with similar schemes – such as the theatre tax relief - so they were not put off by the language. Unfortunately, for those who did not have this additional experience or knowledge, the word tax could be a real deterrent that put them off applying. Some had dismissed the scheme immediately, thinking that it would not be for them.

“Straight away I wrote off MGTR because we don’t do a tax return…I thought you would have to pay some corporation tax to benefit.”

Non-Claimant, Small, Independent

Some of the non-claimants who were not aware of the scheme mentioned that it is possible that they may have heard of it in passing. But they conceded that even if they had received a communication about it, they would have probably ignored it, believing it was not relevant to their organisation, due to the name.

Exhibition type

Some organisations that ran exhibitions which were not eligible, felt the criteria was too restrictive. There was a feeling amongst some participants that the tax relief had been designed with a rather traditional idea of what constitutes an exhibition, and that this idea excluded some more innovative and novel elements of current exhibitions.

For example, some organisations put on exhibitions that could be considered to have a performative element, and these were ineligible. However, this was not always clear cut: in one instance the exhibition involved a procession and was therefore deemed ineligible as the procession was considered a performance. However, the organisation had also been refused the theatre tax relief, on the grounds that it was an exhibition and not a performance. As a result, the organisation felt aggrieved that they had missed out on both tax reliefs because of what they felt to be a lack of understanding around the artistic intention of their work.

Exhibitions with a commercial element were also ineligible. While participants generally understood the broad rationale for this, they felt that it was restrictive in cases where exhibitions that were not primarily commercial but involved a small commercial element. For example, where organisations were exhibiting works of a new, up and coming artist, they may also wish to allow some of the works to be bought. However, if they did so, this would preclude them from claiming MGTR. This was felt to be more of an issue for smaller organisations, who tended to work with newer and less well-known artists.

Some organisations put on exhibitions of work submitted for a competition. These were also ineligible, and the rationale for this was not felt to be completely clear.

The process

The key rationale for claiming MGTR was the opportunity to increase their income and to help with their funding needs. However, there were some instances where the complexity of the process and the steps required, meant that organisations did not stand to benefit.

The process was generally considered to be complicated and there were associated costs, so organisations needed to ensure they had the capacity to complete the claims. This was particularly a challenge for those with small staff teams, and lack of dedicated finance personnel. For claimants, they stood to benefit, despite the additional work, and appeal of this financial benefit was enough to overcome this barrier.

However, some organisations suggested they would need to make substantial structural changes in order to claim, such as setting up a subsidiary to process the relief. This was expensive and exposed them to more financial risk, so it was not necessarily worthwhile to do so.

Furthermore, some smaller organisations who only had a very small budget for exhibitions did not think they would be able to claim enough to make the cost of the process worthwhile.

Case Study: Did not believe it was worthwhile due to low exhibition expenditure

Background: Organisation D is a medium, independent organisation. They do not receive any local or central government funding and are also not accredited as they do not meet the criteria for accreditation. They raise their own funding through a range of activities including entry fees, gift shop and rental of their exhibits.

Experience: They became aware of MGTR through their accountant who attended a sector conference where HMRC presented the scheme. However, they didn’t think that they stood to benefit as they do not tend to spend much on their temporary exhibitions (as they don’t have much to spend) so did not think they would be able to claim much back enough to make the process worthwhile.

“Most of our exhibitions are permanent and we don’t spend much on our temporary ones so we weren’t sure it would be worthwhile. Our main challenges are in repairing and upgrading our whole building, including core facilities like toilets and installing a lift with no funding apart from what we raise”

Non-Claimant, Medium, Independent

Currently, the organisation struggles with a lack of funding so if they were able to access money through MGTR, they did feel it could potentially have a massive impact for them, as they would be able to re-invest that money into improving their permanent exhibitions or hire another member of staff.

Where knowledge of the scheme was already a barrier, this could compound concerns about whether it would be worthwhile to pursue a claim. This is because, if they were unclear about which costs could be claimed for, they were unable to accurately weigh up the financial implications and make an informed decision.

Covid-19 pandemic

It is also worth noting that the current Covid-19 pandemic has prevented organisations from exhibiting for much of 2020, and therefore limited their ability to prepare claims for the financial year 2020/2021.

4. Conclusions and looking to the future

MGTR has been hugely beneficial for organisations that have claimed it, enabling them to increase the number of exhibitions shown, increase the quality and accessibility of their exhibitions, and increase touring of their exhibitions. Moreover, it has had an impact at an organisational level, enabling future investments including upgrading infrastructure, hiring and retaining more staff, and accessing other opportunities for funding. It has also enabled development of community engagement. It is valuable as one of very few sources of unrestricted income, enabling claimants a greater degree of financial freedom. There is evidence of substantial potential for impacts across the sector and beyond, including for local communities. However, participants perceived that take up of the relief had been slow. As a result of this and the long lead time involved in planning exhibitions, it was felt that the full impacts will take some time to be seen.

Currently, a lack of awareness and understanding is the biggest barrier to claiming. In light of that, if uptake is to increase, it is vital to increase awareness and understanding of MGTR, particularly in terms of who can claim, and how to start the process. Those non-claimants who were unaware of the tax relief or that they were eligible to claim wanted simple information about eligibility and what they need to do to make a claim. The most important element for any communication was that it must be immediately clear who the relief was for, otherwise it would likely be overlooked.

Non-claimants suggested a number of sources from which they would like to receive information about the scheme. These included directly from their accounts teams, if they had accounts teams, or directly from HMRC. Suggestions included flagging MGTR on the Gift Aid pages on HMRC website, as for some, this is the main interaction they had with HMRC. Non-claimants would also be happy to receive information from industry bodies, for instance flagged up when applying for other funding, or included in information sent out to museums and galleries related mailing lists. They noted that eligibility criteria must be made really obvious as it is easy for things to get overlooked on a regular email or newsletter.

Some claimants also sought more easily accessible information and would welcome this directly from HMRC, and from financial agents. Reflecting the responses of the non-claimants, they also wanted greater clarity around eligibility to claim, as well as more guidance around acceptable things to claim.

Additionally, the removal of the sunset clause was perceived to be an important step to increase uptake. This is because organisations would be more likely to make necessary administrative and structural changes required to claim, if they had assurance that this would be worthwhile, as they would be able to continue claiming in subsequent years. Some participants also noted that removing the sunset clause would allow organisations to build the income into their longer term plans. Given the long lead time for planning exhibitions, it was noted that organisations would benefit from being able to assess their financial resources in advance. Removal of the sunset clause could also increase likelihood of obtaining funding grants, where they need to demonstrate that they have other stable income available to cover costs not included in those grants. Removal of this clause was seen as a crucial improvement in order for organisations and the sector to realise the full impact of the relief.

“They should get rid of the sunset clause, because it will let us invest properly in an exhibitions programme for the future.”

Claimant, Large, National

Participants felt that MGTR could also be improved by removing some of the restrictions on eligible exhibitions, in order to reflect the diverse, and shifting nature of the exhibitions sector. This would make the process more straightforward and allow more exhibitions to benefit, particularly those using innovative and unusual methods. Simplifying the process was felt to be of vital importance, so as to increase accessibility for those organisations without the financial wherewithal to navigate the claim. Some suggested that there could be more training or awareness sessions to help organisations understand what they need to do.

“Opportunities for training or awareness raising sessions… making it straightforward to make an application, without diluting the rigorousness of the process.”

Claimant, Large, Local Authority

Finally, raising the level at which the relief is capped would allow organisations to benefit even more, though they understood that there would need to be a cap at some level.

5. Appendix

5.1 Sample

The final composition of the samples is outlined below.

Figure 5.1: Claimant sample

Variable	Quotas	Number of interviews
Model	Independent	7
-	LA	3
-	National	5
-	Regional	3
-	University/Military	2
Size	Small (10,000 or less)	2
-	Medium (10,001 – 50,000)	4
-	Large (50,000+)	14
Type	Museum	6
-	Gallery	14
Region	Devolved Regions	7
-	North/Midlands/South West	10
-	London/South East	3
Exhibition type	Static only	12
-	Static and touring	8

Figure 5.2: Non-claimant sample

Variable	Quotas	Number of interviews
Model	Independent	9
-	LA	4
-	Regional	1
-	University/Military	1
Size	Small (10,000 or less)	4
-	Medium (10,001 – 50,000)	6
-	Large (50,000+)	5
Type	Museum	9
-	Gallery	6
Region	Devolved Regions	8
-	North/Midlands/South West	4
-	London/South East	3
Awareness	Aware	11
-	Not aware	4
Accreditation	Non-Accredited	2
Exhibition type	Static only	12
-	Static and touring	3
Source	Arts Council England	9
-	Creative Scotland	2
-	Ipsos MORI desk research	4

6. Our standards and accreditations

Ipsos MORI’s standards and accreditations provide our clients with the peace of mind that they can always depend on us to deliver reliable, sustainable findings. Our focus on quality and continuous improvement means we have embedded a “right first time” approach throughout our organisation.

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7.1 About Ipsos Public Affairs

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1. Please see appendix for further details of the samples ↩