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HMRC internal manual

Museums and Galleries Exhibition Tax Relief

Museums and Galleries Exhibition Tax Relief; calculation; rate of relief

S1218ZCH and S1218ZCK Corporation Tax Act 2009

Where a Museums and Galleries Exhibition Production Company (MGEPC) claims Museums and Galleries Exhibition Tax Relief (MGETR) in respect of enhanceable expenditure, the amount of Museums and Galleries Exhibition Tax Credit (MGETC) to which it is entitled is:

  • 20% of the loss surrendered for a non-touring exhibition, subject to a maximum of £80,000 per exhibition

 

  • 25% of the loss surrendered for a touring exhibition, subject to a maximum of £100,000 per exhibition.

The value of MGETR will depend on whether or not the separate exhibition trade is loss-making and the prevailing rate of Corporation Tax.

The table below shows the value of the MGETR assuming in each case that:

  • at least 80% of the total core expenditure is EEA core expenditure, and
  • the rate of Corporation Tax is 19%
MGEPC with sufficient taxable profits to absorb all of the additional deduction Enhanceable expenditure = 80% of total expenditure

Value of MGETR

= 80% x 20%

= 15% (reduction in Corporation Tax payable)    
     
  MGEPC has no taxable profits and claims the maximum amount of tax credit Enhanceable expenditure = 80% of total expenditure

Value of MGETR

= 80% x 25%

= 20% (tax credit:  touring exhibition)

Or

= 80% x 20%

= 15% (tax credit:  non-touring exhibition)

This means that there will normally be both a timing benefit and an overall financial benefit to surrendering losses for a tax credit.  However, this might not be the case where the special terminal losses rules apply.

The anti-avoidance provisions prevent a company from artificially inflating production costs in order to increase MGETR.  These provisions will also apply to a situation where income is not recognised or is deferred in order increase the surrenderable loss.