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UK live sector frustrated by mini-budget

Calls to extend the VAT break on live event ticket sales again went unheeded in chancellor Rishi Sunak's spring statement

By James Hanley on 23 Mar 2022

Chancellor Rishi Sunak opened the scheme today

Rishi Sunak


The UK’s live music industry has reacted with disappointment to chancellor Rishi Sunak’s spring statement, which was delivered today in the House of Commons.

Calls to extend the VAT break on live event tickets sales past the end of this month again went unheeded, with the temporary 12.5% rate now set to revert to 20% from 1 April. There were also no improvements announced to the government’s £800m insurance scheme for live events

Trade body LIVE (Live music Industry Venues and Entertainment) has appealed for the government to work with the industry to consider a cultural VAT rate of 5% on ticket sales.

“Live music is facing new and unprecedented challenges that threaten to wreck one of the UK’s cultural crown jewels – a 7.5% increase in VAT on tickets, wholesale cost increases and major ticket cancellations due to spiking covid cases,” says a spokesperson for the organisation. “At the same time, the last remaining help from government is being withdrawn.”

However, better news for the sector arrived in the form of the previously announced 50% discount on business rates, which was confirmed by the chancellor.

“While we welcome the business rates discount, we need further measures that can provide a cash injection to all areas of the sector, such as action on VAT,” adds the LIVE spokesperson. “We are calling on the chancellor to look again at these measures, which would help secure the sector’s recovery and allow our £4.5 billion industry to continue boosting the UK economy.”

Association of Independent Festivals (AIF) CEO Paul Reed suggests the mini-budget has done little or nothing to assist the recovery of the festival circuit.

“We are disappointed that the chancellor has not responded to our repeated calls to grant an extension to the 12.5% VAT rate on festival tickets beyond the end of March”

“We are disappointed that the chancellor has not responded to our repeated calls to grant an extension to the 12.5% VAT rate on festival tickets beyond the end of March,” he says. “Festival organisers are experiencing cost increases of between 20-30%, which is way beyond rapidly rising inflation, with extreme pressure along the entire supply chain. We urge the government to look at this again and maintain the reduced rate on VAT.

“We also ask the government to urgently reconsider the removal of tax incentives to use certain biofuels. These should be maintained at the current rate as a transitional measure to encourage use of greener fuels at festivals. To do otherwise is completely contrary to the government’s objectives of incentivising energy efficiency and reducing emissions.”

Despite giving the thumbs-up to the business rates discount for grassroots music venues, Music Venue Trust chief Mark Davyd is keen to highlight other concerns.

“With no action for businesses on energy bills, or NI liability, and the missed opportunity of action on VAT that would support the sector to recover from the Covid crisis, the outcome of the budget is that none of the extraordinary financial pressures being placed on venues have been mitigated or alleviated,” he says. “This budget has failed to respond to inflationary increases from rent, supplies, and services running in excess of 20% across the sector.

“We note that the government has recommitted itself to supporting business investment, especially research and development. We again ask that the secretary of state for culture should enter into meaningful discussions with the live music industry to create R&D tax incentives and direct financial support to achieve that outcome.”

The Night Time Industries Association (NTIA), meanwhile, went further still in its criticism, declaring itself “extremely disappointed”, warning the sector faces a “perfect storm” of challenges over the next 12 months, particularly in light of the cost of living crisis.

“We called on the chancellor before the spring statement to produce a package that included an extension of VAT and business rates reliefs, a cancellation of the proposed NI hike, and action on businesses energy bills and fuel duty, to allow the sector financial headroom to survive in something resembling its pre-pandemic form,” says NTIA chief Michael Kill. “It is very disappointing that today he took none of these steps.”

 


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