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Cultural tax reliefs: enhanced and extended support for charities

Vital cultural sector tax reliefs have been enhanced and extended following the 2021 Autumn Statement. To ensure you’re aware of all the reliefs and exactly what your organisation is entitled to here’s a roundup of everything you need to know. 
Cultural Tax Reliefs: enhanced and extended

Cultural Tax Reliefs: enhanced and extended

The arts and culture sector has suffered significantly during the coronavirus pandemic, with organisations forced to cancel, reschedule and adapt productions to keep up with the changing circumstances.

The government has been widening the scope of creative industries relief since the introduction of Film Tax Relief in 2009 which extends to theatrical productions, orchestral performances and museum and gallery exhibitions. 

There are a range of exemptions and tax reliefs that can provide support to the sector by way of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR), and following an announcement during the 2021 Autumn Statement, these cultural reliefs have been enhanced as a temporary measure to benefit the arts and culture sector during the economic recovery from COVID-19. 

About the author

Esther Barratt

+44 (0)207 710 0930
barratte@buzzacott.co.uk

Cultural Tax Reliefs: enhanced and extended

The arts and culture sector has suffered significantly during the coronavirus pandemic, with organisations forced to cancel, reschedule and adapt productions to keep up with the changing circumstances.

The government has been widening the scope of creative industries relief since the introduction of Film Tax Relief in 2009 which extends to theatrical productions, orchestral performances and museum and gallery exhibitions. 

There are a range of exemptions and tax reliefs that can provide support to the sector by way of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR), and following an announcement during the 2021 Autumn Statement, these cultural reliefs have been enhanced as a temporary measure to benefit the arts and culture sector during the economic recovery from COVID-19. 

Operation of relief – how do cultural tax reliefs work?

Operation of relief – how do cultural tax reliefs work?

In practice, the cultural sector reliefs offer an enhanced deduction that can be taken in respect of costs incurred between a project being greenlit and its opening night; and costs incurred in closing the production after the final performance. Eligible expenditure does not include, non-producing activities, ordinary running activities and marketing costs. 

The additional deduction is the lesser of 80% of the total core expenditure or the actual expenditure incurred in the European Economic Area.  

If the project is loss-making after the enhanced deduction, the loss can be surrendered for a tax credit equal to a proportion of the losses surrendered. Charities are also able to claim the tax credits even though their productions and exhibitions are usually exempt from tax. 

There is a cap on the value of the tax credit available for MGETR, of £80k (for non-touring exhibitions) and £100k (for touring exhibitions). This cap does not apply for orchestras and theatrical productions.

Enhancement and extension of cultural tax reliefs

Enhancement and extension of cultural tax reliefs

The 2021 Autumn Statement saw the government announce an intention to increase the rate of the cultural reliefs.  

The enhanced rates are a temporary measure, currently anticipated to last two years and five months, beginning 27 October 2021. The relief rates will taper from 1 April 2023 and return to the previous levels from 1 April 2024.  

The increased rates will apply where production activities commence on or after 27 October 2021 and are detailed in the below table.

Rate % 

Previous rates 

From 27 October 2021 to 31 March 2023 

2023 to 2024 

2024 to 2025 

TTR: non-touring/touring 

20 / 25 

45 / 50 

30 / 35 

20 / 25 

OTR 

25 

50 

35 

25 

MGETR: non-touring/touring 

20 / 25 

45 / 50 

30 / 35 

20 / 25 

In addition, MGETR, which was due to expire on 31 March 2022, has been extended for a further two years until 31 March 2024. It is currently uncertain whether this will be extended further in a future budget. However, the cap for MGETR of £80k (for non-touring productions) and £100k (for touring productions) has not been increased. 

The enhancement and extension of the reliefs is welcome news for the sector and will help production companies to develop exhibitions and productions to encourage visitors back to venues.

 This article was featured in our February Vat & tax bulletin, to read the bulletin click here.

How can we help?

How can we help

We have been working with a wide range of arts and culture organisations for many years and understand the nuanced needs of different entities in the sector. You could be missing out on tax credits as a result of one or more of these cultural tax reliefs. Speak to one of our expert tax advisers and we can help guide you through the process to ensure you’re claiming for all that you’re eligible for.

Additionally, you may also be interested in our full review of arts tax reliefs collated in a handy PDF guide.

Funding the arts: tax reliefs

For further guidance or advice, please fill in the form below and one of our experts will be in touch.

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