Exhibition Relief Funding

Museums and Galleries Exhibition Tax Relief (MEGTR) came temporarily into UK law to give financial support for mounting and/or touring new public-facing exhibitions in the five years from 1 April 2017 to 31 March 2022, after which date the scheme is currently destined to end – unless the chancellor of the exchequer is persuaded to extend MEGTR via his annual Budget Statement (for tax year 6 April 2021 to 5 April 2022) in Parliament on 3 March 2021.

A leading advocate of MEGTR’s continuation beyond March 2022 is an alliance of UK visual arts networks: Visual Arts Alliance (VAA). Co-ordinated by the Contemporary Visual Art Network for England, VAA includes the Crafts Council, Visual Arts Galleries Wales, Scottish Contemporary Art Network, Visual Artists Ireland [NI] and Belfast Visual Arts Forum. VAA has recently made written submissions to the UK government calling for ‘retention of MGETR to provide certainty and reassurance to the sector ahead of the current expiration date of April 2022’ and arguing for several key reforms and improvements. These will be explored together with key elements of the current MEGTR scheme.

MGETR mirrors UK’s 2007 innovative Film Tax Relief (FTR) law that gives UK film production companies the right to claim cash re-payment from UK Treasury of a percentage of actual expenditure incurred on filming activities. FTR continues to be welcomed and used by the UK film industry, and proved so successful that over subsequent years successive UK governments introduced similar schemes for other creative sectors, including UK productions of High-end (expensive and very high quality) TV, Children’s TV, Animation, Video Games, Theatre and Orchestra.

The extension in 2017 of successful ‘tax relief’ schemes to UK visual art exhibitions first emerged in the UK government’s 2016 Budget Statement: ‘Museums and galleries tax relief. The government will broaden the scope of the museums and galleries tax relief to include permanent exhibitions so that it is accessible to a wider range of institutions across the country. The rates of relief will be set at 25% for touring exhibitions and 20% for non-touring exhibitions and the relief will be capped at £500,000 of qualifying expenditure per exhibition. The relief will take effect from 1 April 2017, with a sunset clause which means the relief will expire in April 2022 if not renewed. In 2020, the government will review the tax relief and set out plans beyond 2022.’ It is understandable that such a review was not conducted during the annus horribilis that was 2020.

Since MGETR’s introduction, many UK museums and galleries have successfully relied on the scheme to provide injections of much-needed cash enabling them to plan and mount and/or tour new exhibitions. The basis for calculating an exhibition’s eligibility for cash claims – ‘repayable credit’ – is ‘core’ expenditure paid for goods and services in the UK (and in the European Economic Area by 31 December 2020). The scheme’s method for calculating cash claims is (like most tax-relief schemes) a straightforward exercise for tax specialists, but can be tricky for lay people. However, Arts Council England’s website posts user-friendly guidance with FAQs and good examples, explaining how to claim the maximum amount payable by UK Treasury of £100,000 for each touring exhibition and £80,000 for each non-touring exhibition.

MGETR defines ‘core’ expenditure as ‘the activities directly involved in producing the exhibition. This could include curator fees and the cost of de-installing and closing.’ Expenditure excluded from ‘core’ calculations includes: indirect expenditure on marketing, raising finance, general legal services; costs of de-installing and closing if the period between opening and closing an exhibition at a single venue exceeds 12 months; invigilation costs when the exhibition is running; development expenditure if the exhibition did not go ahead.

Exhibitions that qualify under MGETR are ‘exhibitions and displays of objects, works and artefacts, which are considered to be of scientific, historic, cultural or artistic interest … including the exhibition of a single object or work … and the general public must have admittance to the exhibition, whether or not they are charged for admission’. Exhibitions not qualifying are those ‘organised in connection with a competition of any kind, or whose main purpose or one of its main purposes is to sell anything displayed. The sale of merchandise associated with the exhibition will not exclude an exhibition from relief.’

VAA’s arguments for the scheme’s retention beyond March 2022 are based on evidence harvested from experiences of museum and gallery scheme users over the past four years or so; all of which is intended to demonstrate ‘benefits for eligible organisations as a source of unrestricted funds that support core administrative functions, the commissioning of new work, artist residencies, and underwrites risk in artistic and curatorial practice’. These contentions are buttressed by case studies and data evidencing a range of economic and social impacts including: investment in talent development and training and educational activities, employee retention and growth, and strengthening marketing audience development (especially inbound tourism).

Reforms to MGETR are called for by VAA ‘to counteract barriers, enhance take-up and improve alignment between exhibition activity of galleries and museums … particularly medium to small scale arts and heritage organisations’. A key reform is of the scheme’s current eligibility criterion requiring museum and gallery claimants to be registered charitable organisations whose key purpose is to deliver ‘public benefit’, which VAA contends should be replaced by a ‘not-for-profit’ criterion – given that exhibitions must in any event be public-facing to qualify under the scheme.

Another key reform is to allow digital and/or online programme expenditure to qualify within ‘core’ spend – given that for the foreseeable future all exhibition activities are likely to be online only in order to comply with Covid-19 restrictions.

A further key reform is to allow ‘live art’ events to qualify as exhibition content (performance art and other live components of museum and gallery exhibition and display are currently excluded from the scheme).

Perhaps the most challenging reform is VAA’s call for inclusion within MEGTR exhibitions of artworks for first/primary sale (not currently allowed, even if any such sales are serendipitous/unplanned); and VAA suggests realistic and achievable ways and means of preventing potential exploitation of such a reform by the commercial art market sector.


© Henry Lydiate 2021

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.