Tax Changes Threaten Live Music Venues

The tax changes announced in the budget could have “devastating, unintended consequences” for live music venues, including widespread closures and job losses, industry groups have warned. The bodies, which represent almost 1,000 live music venues, are calling for an urgent rethink of the Chancellor’s changes to the business rates system.

Impact on Live Music Venues

If not, they warn that hundreds of venues could close, ticket prices could rise and thousands across the country could lose their jobs. Business rates, which are a tax on commercial property in England and Wales, are calculated using a complex formula for the value of the property, determined every three years by a government agency.

Business Rates System

The Chancellor explained in her budget speech that although she was abolishing the trade tax discount for small hospitality businesses, they would benefit from “permanently lower tax rates”. The burden, she said, would instead be shifted to large companies with large footprints like Amazon. But both small and large businesses have seen the assessed value of their properties skyrocket, more than negating any discount to the small business tax rate, and bills for arena space will rise dramatically.

Consequences of Tax Changes

In a letter, the trade associations write that the impact of the changes is "staggering": "Hundreds of grassroots music venues will close in the coming years as reassessments drive up costs. This will deprive communities of valuable cultural spaces and limit the potential of the UK’s creative sector. These venues are where artists like Ed Sheeran started their careers." Ticket prices for consumers attending arena shows will rise as the dramatic rise in arena tax costs is likely to trickle down to ticket prices, undermining the government’s own efforts to combat the cost of living crisis.

Call for Reform

They further warn that the government will “undermine its own industrial strategy and creative sector plan, which is committed to removing barriers to the growth of live events”, and will also reduce spending in hotels, bars, restaurants and other high streets across the country. To mitigate the impact of the tax changes, they are calling for an immediate 40% discount on business rates for live venues, as well as a "fundamental reform" to the UK’s commercial property valuation system and a "rapid investigation" into how performance spaces are valued.

Government Response

In response, a Treasury spokesperson said: "With the end of Covid support and rising valuations, some music venues could face higher costs – so we have stepped in to cap bills with a £4.3 billion support package and keep corporation tax at 25% – the lowest rate in the G7." However, the live music industry’s warning comes after small retail, hospitality and leisure businesses warned of the possibility of widespread closures due to changes to the business rates system.

Industry Concerns

Analysis has found that over the next three years, despite the transitional arrangements, the average pub will pay an extra £12,900 in business rates, while the average hotel’s bill will rise by £205,200. A Treasury spokesman said the small business cap will mean “a typical independent pub will pay around £4,800 less next year than it would otherwise have done”. However, industry groups remain concerned that the changes will have a devastating impact on the live music sector.