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HMRC internal manual

Corporate Finance Manual

Interest restriction: tax-EBITDA: Museums and Galleries Exhibition Tax Relief

TIOPA10/S407(3)(j)

Incorporated museums, galleries and other qualifying heritage institutions are entitled to claim tax relief for qualifying expenditure on new exhibitions, including those that tour.

Museums and Galleries Exhibition Tax relief is aimed at the charitable not for profit sector. Deductions for Museums and Galleries Exhibition Tax Relief under CTA09/S1218ZCE and tax credits under CTA09/S1218ZCH are excluded from the calculation of adjusted corporation tax earnings when determining a company’s tax-EBITDA.

Qualifying companies can claim:

  • an additional tax deduction of 100% of qualifying expenditure incurred putting on an exhibition, excluding costs whilst the exhibition is running; or
  • if the company makes a loss, a repayable tax credit of 20% (25% for touring exhibitions) of the loss up to the amount of qualifying expenditure.
  • The amount of tax relief available is subject to a restriction of £80,000 per exhibition (£100,000 for a touring exhibition).

Effect for tax-EBITDA purposes

Museums and Galleries Exhibition Tax Relief is one of the qualifying tax reliefs specified as an excluded amount in TIOPA10/S407(3).

Any additional deductions received over and above the actual amount of qualifying expenditure incurred would have a distorting effect of reducing the earned profit of the company for tax-EBITDA purposes, decreasing the group’s interest capacity.

Conversely, the receipt of a tax credit would have the effect of increasing a group’s interest allowance if included as an income item for tax-EBITDA purposes. This would serve to increase the benefit received for companies claiming Museums and Galleries Exhibition Tax relief beyond the intention of the original relief.

Consequently, additional deductions and tax credits received under s1218ZCE and s1218ZCH respectively, should not be brought into account when calculating taxable total profits of the period to determine a company’s tax-EBITDA.