UK government confirms VAT cut for concerts

UK government confirms VAT cut for concerts

Chancellor Rishi Sunak has announced a series of major spending commitments to help the economy and prevent mass unemployment.

However, there remains concern in the music industry at the lack of specific measures for the sector, as well as the absence of any further support for the self-employed.

Sunak’s £30 billion plan includes a VAT cut on hospitality. The reduction from 20% to 5% will last for six months.

Updated (July 9): The government has clarified today that concerts will benefit from the VAT cut. With the measure limited for six months, it remains to be seen how much the live sector will benefit from the move. But the 5% rate will apply to advance sales of tickets for events to be staged after January 12, 2021, the cut-off date for the VAT reduction.

UK Music welcomed the announcement by Culture Secretary Oliver Dowden.

Both the BPI and HMV owner Doug Putman have called for a sales tax holiday for physical music to boost retail, while UK Music has called for a VAT exemption on ticket sales to help the live sector.

Reacting to Sunak’s summer statement before the clarification on VAT, UK Music acting CEO Tom Kiehl said: “The music industry is in crisis and we need VAT exemptions, which would be a lifeline for the thousands who work in the music industry.”

The Chancellor confirmed that the furlough scheme will end in October. The government will pay firms a £1,000 bonus for every member of staff retained for three months when the furlough scheme concludes.

“We will continue to push the Chancellor and the government to extend the support for the self-employed,” said Kiehl. “There is still no clear timeline for when live music can reopen, yet the furlough scheme will start tapering to an end within days.

“While other sectors are gradually reopening, large parts of the music industry are forced to remain closed. We need a continued package of employment support and help to ensure businesses have easier access to loans and other forms of finance.”

The music industry is in crisis and we need VAT exemptions, which would be a lifeline for the thousands who work in the music industry

Tom Kiehl

The government has already announced a £1.57 billion package to support the cultural sector, including music venues. But the full details have yet to be confirmed.

“As the #LetTheMusicPlay campaign has shown, there is massive support for our world-leading music industry, which sustains 190,000 jobs and contributes £5.2bn to the UK economy,” said Kiehl. “But we urgently need more government support until the music business can get back fully on its feet.

“The government’s £1.57bn support package that was announced on Sunday is welcome. However, we need to see the details of how that funding will be divided to ensure no part of the industry is left behind.”

Michael Kill, chief executive of the Night-Time Industries Association, also responded to Sunak’s statement.

 “Whilst there is much to be welcomed in this announcement for many businesses, it leaves many in our sector beleaguered,” he said. “Most of our members either can’t open at all due to social distancing, or can only open with reduced capacity resulting in more financial losses. It’s as if the government are letting us slip through the cracks between the various well-intentioned schemes. 

“A VAT cut when you just can’t open at all is not of any help. Late night venues in towns and cities across the country are facing catastrophe. That will be a tragedy for the business owners, their staff and their customers. But there will be a consequential set of problems when people, particularly youngsters, are left with nowhere to go for music and social entertainment. Instead, we’ll see a further rise in illegal raves and street parties which present a new set of challenges. We renew our call on the government. You have to help us more with direct financial support.”

Caroline Norbury, chief executive, Creative Industries Federation and Creative England, welcomed measures to support young people in employment.

“The Chancellor's statement today adds another vital piece into the economic jigsaw of recovery as it recognises that alongside funding for infrastructure and institutions, investment in people is vital. The creative industries will be integral to our economic and social regeneration, providing jobs and opportunities in every community as we rebuild. They will also play an instrumental role in bringing communities together and maintaining the nation's mental health, along with building a sustainable and green future. 

“Supporting the next generation of talent is a high priority with our members, we stand ready to test new models and ways of working to ensure that the future of the next generation of talent is secured, young people and freelancers are supported - and unemployment tackled. Alongside support for job creation, government should further unlock the creative potential of the next generation by supporting new start-ups and freelance work, and by introducing greater flexibility to the apprenticeship system.” 

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