Changes to creative sector tax reliefs

People looking at art in museum

17th October 2023

Over recent months, a number of changes have been announced which will affect claims made for creative sector tax reliefs in the future.

These changes are summarised below:

  • Extension of the sunset clause for Museums and Galleries Exhibition tax relief from 31 March 2024 to 31 March 2026
  • Extension of the temporary increases in tax credit rates from 2023 to 2025
  • Removal of European Economic Area (EEA) expenditure from core expenditure definition
  • Restriction in the level of relief available for connected party expenditure

The first two changes are a positive move for the sector as they boost the value of claims and give more certainty for the coming periods. As the creative sector tax reliefs were introduced pre-Brexit, UK legislation allowed both UK and EEA expenditure to qualify as core expenditure. However, given that the UK is now no longer part of the EU, new legislation is being introduced to address this. In order to qualify for the relief, at least 10% of total core expenditure needs to be UK expenditure (previously 25% EEA) and EEA expenditure will no longer qualifying for the additional deduction. This will have the most impact on touring theatre and exhibitions companies using EEA goods and services.

In addition to the above technical changes to the reliefs, HMRC has also announced a procedural change to the process for making a claim. More details will follow on this point, but it is clear that the change will result in additional information being required by HMRC.

If you would like to know more about these changes, or about making creative sector tax relief claims, please contact Alice Palmer, Senior Manager, or Sally Gatward, Assistant Manager, or your usual haysmacintyre contact for more information.

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