The Budget: A VAT update for Arts & Culture organisations
The latest Budget includes changes to VAT126 claims that may be relevant to museums, galleries and other qualifying arts and culture organisations.
What’s changing?
The Budget introduces enabling powers and safeguards relating to VAT126 claims, with implementation linked to Royal Assent.
For organisations that rely on VAT recovery, it’s worth understanding what these changes could mean for your existing arrangements and future claims.
What should you be considering?
- VAT recovery: Review your current arrangements and consider whether the changes could affect your organisation.
- Eligibility: Check whether the provisions apply to your organisation and its activities.
- What’s next: Keep an eye on further guidance to understand how the changes will work in practice.
Overseas services: Changes to the VAT reverse charge
From April 2027, the government will reform the VAT reverse charge for business-to-business services purchased from overseas suppliers.
Under the new rules, the reverse charge will apply only where the UK recipient is VAT-registered. Overseas suppliers will instead need to charge UK VAT on relevant services supplied to UK organisations that aren’t VAT-registered.
What could this mean for your charity?
- Increased costs: If your charity isn’t VAT-registered, you could face additional VAT costs on overseas services, such as cloud software, digital subscriptions and consultancy.
- VAT registration requirement: Consider if this impacts any VAT registration requirements that may have arisen due to the previous reverse charge rules.
- Review your suppliers: Identify the overseas services your charity uses and consider how the changes could affect your costs.
- Plan ahead: Factor any potential additional VAT costs into your budgets ahead of April 2027.
What’s next?
Our tax experts have taken a closer look at the announcements and their implications in our full Autumn Budget summary. Read the full version here.
