03 September 2021
Charity and Not for profit,
Tax Reliefs including R&D
Financial support in the form of tax relief is available to companies and organisations throughout the creative industries – but the pandemic has created a divide between those able to claim it and those who can’t. So how can struggling smaller art galleries, museums, theatres and orchestras make sure they are benefiting from support in future? Sara Andrews, tax specialist at Haines Watts, explains.
Arts and culture have experienced an exceptionally turbulent year with many creative/arts projects struggling to make ends meet. While a Government handout went some way towards helping, a significant divide emerged between those exhibitions, art galleries and other live performance companies that could claim support available, and those who couldn’t.
On the one hand, lots of major exhibits and attractions have had the financial clout to innovate during the pandemic. This has enabled them to find new ways to reach audiences – either by digitising their offering to enable people to view, visit and participate online, or by expanding their offering to take their shows out on the road, finding covid-friendly outside spaces.
Such organisations could be able to make claims for tax relief against much of that activity. We work with many large attractions that have found new and innovative ways to make themselves more visible and to continue to reach audiences during lockdowns.
However, we work with smaller organisations, too. Art galleries, museums and community-scale theatres that have had to close their doors and furlough staff, and which don’t have the financial power to diversify or find new ways to reach audiences.
Visibility is everything
For those smaller organisations, the road to recovery might not be so clear. Even though easing restrictions should bring visitors and audiences back through their doors, they have lost 18 months’ worth of momentum, of visibility, and of income.
That reduced income means they haven’t been able to invest in new exhibitions, and therefore won’t be able to claim associated tax relief.
We’re in no doubt about the value of the creative industries to the UK. A new creative industry report has been published – available from We Are Creative via this link – which underlines the importance of these industries, not just to our economy but also to our society and collective mental wellbeing.
We want them to be able to invest in new shows and new exhibits that will grab attention and bring audiences back in – and to do so knowing they could potentially claim 25% of their expenditure back again.
The Creative Industries Tax Reliefs were devised to encourage investment and innovation in these sectors. It is a potentially crucial lifeline and one that we would urge creative organisations to bear in mind when they are planning for the years ahead.
These reliefs could be the decisive factor in being able to put on shows and exhibitions that can really draw crowds back in.
What are Creative Industries Tax Reliefs?
Creative Industries Tax Reliefs are available to help some of the sectors that have been hit hardest by the pandemic, including the Theatre, Orchestra, Animation and Museum and Galleries sectors.
We’ve seen the number of claims for the various reliefs rising year on year: since 2007, there have £4.5bn-worth of film tax relief paid out. In the year ending March 2021, there was £380m paid in high-end television programming relief. Over 2,900 exhibitions have been supported since 2017.
But despite this uplift there are still a huge number of businesses missing out, with claims still much lower than Government predictions, and that is certainly the case when it comes to Museums and Galleries Exhibitions Tax Relief (MGETR).
Museums and Galleries Exhibitions Tax Relief
MGETR was introduced in April 2017 to support museums and galleries in developing new exhibitions. The relief works by enhancing expenditure incurred in the exhibition process.
With some of our beloved museums having closed their doors for half of the year and visitor numbers being limited, museums and galleries should consider if they are eligible to claim reliefs for 2020 and previous years.
Unlike many of the Creative Industries tax reliefs, Museums and Galleries Tax Relief (MGTR) is not open to commercial companies. Instead, it is available to newly-developed exhibitions, either temporary or permanent, produced by charitable companies, their trading subsidiaries, or companies wholly owned by local authorities.
Qualifying exhibitions are defined as a curated display of an organised collection of works (or of a single object of work) considered to be of scientific, historic, or cultural interest.
Orchestra Tax Relief
Orchestra Tax Relief – or OTR – was introduced to encourage and support the creation of orchestral concerts. It’s processed through the Corporation Tax system and is available to incorporated companies, commercial and charitable organisations, that produce qualifying orchestral concerts. Even Charities, commonly exempt from Corporation Tax, are eligible to claim.
A qualifying orchestral concert is one which:
• Is performed by an orchestra, ensemble, group or band consisting wholly or mainly of instrumentalists who are the primary focus of the concert
• Consists of a minimum of 12 instrumentalists
• Features instruments that are not electronically amplified
• Is intended to be performed live for the paying public or for educational purposes
• At least 25% of core expenditure is on goods or services provided from within the European Economic Area (EEA).
Theatre Tax Relief
With social distancing measures having delayed many productions, the Theatre Tax Relief can be the cash injection production companies are looking for at the moment. In 2020/21 the Government paid out £74m in reliefs to encourage the creation of theatrical productions. And as they say, the show must go on, if you’ve had to create your production as a live stream event this year, as long as it meets the commercial obligations, you could still be eligible to receive the relief.
A TTR-qualifying production is defined as a dramatic production or a traditional ballet, which includes the production of a play, an opera, a ballet, or a musical.
Exploring Creative Tax Reliefs
With Creative Reliefs, it’s not just about exploring the possible cash that could be locked in your business right now, but also to ensure any claims you have made previously or are in the process of making have been fully maximised.
If you want to have a chat about how we can help you to improve cash flow and take advantage of grants and reliefs, get in touch with Haines Watts today.