Free entry is hoped to boost visitor numbers and “give more people access to arts and culture”, it said.
The government is hoping that a VAT refund will encourage more museums and galleries to open free of charge.
Its VAT Refund Scheme, reopening this Autumn, will be available to museums and galleries which are open to the general public for at least 30 hours per week without exception, and offer free entry without prior appointment.
Eligible organsations will also need to hold collections in a purpose-built building, and display details of free entry and opening hours on its website.
The government hopes that an increase in organisations offering free entry will in turn boost visitor numbers and “give more people access to arts and culture”.
It said the scheme will help organisations to “boost their finances and open up their collections more regularly.”
Between April 2001 and June 2022, the total amount of VAT refunds issued to museums and galleries, under Section 33A of the VAT Act 1994 is estimated to be between £900 million and £1,000 million. This is based on HMRC VAT returns and assessments of the proportion of non-business activities.
Arts Minister Lord Parkinson of Whitley Bay today announced that the scheme will reopen for new applications in the autumn.
He is encouraging museums and galleries which are considering putting on exhibitions for free, as well as institutions already eligible but not currently taking advantage of the scheme, to apply.
“I encourage cultural institutions across the UK to apply for the VAT refund scheme so they can help make sure people from all backgrounds get to experience great arts and culture for free,” he said.
Organisations taking part in the scheme are entitled to a refund on VAT incurred on goods and services which are purchased in order to provide free admission.
A total of 159 sites across the UK currently benefit from the scheme, including the People’s History Museum in Manchester, the Peter Scott Gallery in Lancaster, the Burns House Museum in Kilmarnock, Falkirk’s Callendar House, the National Gallery of Scotland in Edinburgh, the Walker Art Gallery in Liverpool, and National Museum Cardiff.
It is estimated that museums and galleries which were added to the scheme in 2020 will benefit from more than £70 million in VAT refunds in the six years after joining.
The Government has also extended the sunset clause on the Museums and Galleries Exhibitions Tax Relief scheme, which aims to encourage cultural venues to develop new exhibitions through financial incentives.
There will be 45% tax relief for permanent and temporary exhibitions and 50% tax relief on touring exhibitions respectively up to a maximum of £100,000.
From 1 April 2023, these rates will be reduced to 30% and 35% respectively, before returning to their usual rates of 20 per cent and 25 per cent on 1 April 2024.