Cultural tax reliefs are UK government incentives aimed at supporting and promoting the production of cultural content, mainly aimed at theatrical productions, orchestral performances, and exhibits within museum and gallery settings.
Eligible organisations that put on qualifying exhibits and performances can receive an additional 80% deduction for a majority of their UK production costs (or EEA spend if incurred pre 1 April 2024) when calculating their profit, or loss, for each qualifying exhibit or production.
The loss can then be traded in for a tax credit, which is on the lower of:
- the total tax adjusted loss after the 80% additional deduction has been given; or
- the 80% additional deduction
In the Spring Budget, the previous Chancellor announced the tax credits for cultural reliefs will now be permanently set to[1]:
- 45% for touring productions and all orchestra productions (currently 50%); and
- 40% for non-touring productions (currently 45%).
Eligible charities tend to benefit from one of the named reliefs:
-
Theatre Tax Relief (“TTR”)
This is targeted at theatrical productions, including plays, musicals, and operas and ballet performances.
To be eligible for Theatre Tax Relief, a production must be intended for live performance to a paying audience or provided for educational purposes. The performance itself must not meet one of the exclusions (for example, used as an advertising tool, include wild animals, mainly used to create a ‘relevant recording’, etc).
Other criteria and exclusions apply, one important point of which is that there can only be one theatrical production company making a claim. This is usually the company that is responsible for making the artistic and creative decisions about the production.
-
Orchestra Tax Relief (“OTR”)
This is aimed at orchestras and other musical ensembles that provide live performances to the paying public or for educational purposes.
Generally, for orchestras to be eligible for the relief, there must be a minimum of 12 instrumentalists in a live production where all or the majority of instruments can’t be electronically amplified. Other criteria must also be met.
-
Museum and Galleries Exhibition Tax Relief (“MGETR”)
MGETR aims to encourage the development of exhibitions that promote public access to art, history, and culture by charities or wholly owned trading subsidiaries that maintain a museum, gallery or archive.
Generally, eligible exhibitions must intend to be open to the public and must contain a curated display of a collection of objects, or works (which can include a single object), that is of scientific, historic, cultural or artistic interest.
Other criteria and exclusions apply.
An example of how cultural reliefs work
A museum organises a touring exhibition. The total UK core qualifying expenditure on this exhibition is £100,000, and the green light for the production is given on 1 May 2024.
Since this is a touring exhibition, the current rate of relief is 50%.
Assuming the exhibit is running at a loss before the additional 80% deduction is given, the tax credit available would be 50% of the 80% total UK qualifying core expenditure given as an additional deduction when calculating the exhibit’s tax adjusted profits (i.e. (£100,000 * 80%) * 50% = £40,000).
The museum would receive £40,000 as a tax credit, which is either repaid to the museum, or offset against their corporation tax liability, should they have taxable profits during the period in which the claim is made.
These reliefs, especially for the charity sector, are very valuable, but with limited guidance available, it can be difficult to understand what productions/exhibits may qualify and what costs can or cannot be claimed. Our cultural tax relief specialists Frankie Coombe or James Clark will be able to provide their assistance and expertise where needed.
