Why aren't museums and galleries applying for tax relief?
The Museum and Galleries Tax Relief has not been taken up by nearly as many companies and charities as anticipated by HMRC. This tax relief allows qualifying businesses to develop new exhibitions and claim a cash benefit up to a maximum of 40%. It was expected that many more would take up this credit in the wake of the pandemic as the sector reopened.
HMRC collaborated with 35 such eligible companies and charities for a research paper which explored the experiences of applying and the barriers encountered by applicants in the hopes of finding out why many aren’t claiming. The findings seemed to show that a lack of awareness and insufficient understanding of the available relief were leading to the majority of organizations not applying. Smaller charities who do not have access to specialist tax advisers could be completely unaware of the help available or simply may not have the resources to complete the process.
The inclusion of the word ‘tax’ in the title had also put off many applicants who had incorrectly assumed that it wasn’t applicable to their non-tax paying status.
The Museum and Galleries Tax Relief is unique among creative tax relief regimes in that it includes a sunset clause which allowed HMRC to review whether applications could continue beyond April 2022 and, in the Autumn Budget, it was decided that the clause would extend to 1st of April 2024.
The issue remains that many museum and gallery exhibitions take multiple years to plan and organizations may need to make structural changes in order to benefit from this relief. It can be argued that removing the sunset clause would give businesses and charities reassurance that the benefits of making the claim would outweigh the costs.
For information on tax relief available to you nd your business, get in touch!