MGETR70040 - Museums and Galleries Exhibition Tax Relief; calculation; additional deduction
S1218ZCF Corporation Tax Act 2009
A Museums and Galleries Exhibition Production Company (MGEPC) entitled to Museums and Galleries Exhibition Tax Relief (MGETR) can claim an additional deduction in computing the taxable profits of the separate exhibition trade.
The effect of the additional deduction is to increase the amount of expenditure for tax purposes.听 This may decrease the taxable profit of the separate exhibition trade and therefore the amount of Corporation Tax that would otherwise be payable.听 It may also create or increase a loss in the separate exhibition trade, some or all of which may be available to surrender for a Museums and Galleries Exhibition Tax Credit (MGETC).
Example: production completed in a single period
A MGEPC undertakes a qualifying exhibition for 拢100,000, all of which is European core expenditure.听 It receives 拢200,000 from exploitation of the exhibition and therefore generates a profit of 拢100,000 on which it would normally pay Corporation Tax.听 The company is subject to Corporation Tax at a rate of 19%.听 The production and running of the exhibition all takes place in a single period.
Expenditure on the production of the exhibition is eligible for tax relief.听 The company is entitled to an additional deduction in computing its taxable profits/losses of the separate exhibition trade.听 Since all of the core expenditure is European expenditure, the additional deduction is calculated by reference to 80% of the total core expenditure.
| Income | 拢200,000 |
| 听 | 听 |
| Expenditure | (拢100,000) |
| Trading profit (before MGETR): | 拢100,000 |
| MGETR: Additional deduction | 听 |
| (80% x 拢100,000 total European core expenditure) | (拢80,000) |
| Trading profit after MGETR | 拢20,000 |
Without MGETR, the company would have been liable to pay Corporation Tax of 拢19,000 (19% corporation tax rate x the pre-MGETR profit of 拢100,000).
The additional deduction claimed under MGETR reduces the Corporation Tax liability to 拢3,800 (19% corporation tax rate x the post-OTR profit of 拢20k).听 The benefit of the MGETR claim to the company is therefore 拢15,200 (拢19,000 - 拢3,800).
In this example, the MGETR is worth 15.2% of the total core expenditure.