It’s tough operating a grassroots music venue. Business rates make up a large proportion of a small or medium venue’s outgoings so the announcement in January that the government will reduce business rates for these venues by 50% is a welcome boost.
Grassroots venues are a vital component of the music industry, giving new artists the platform to develop their talents and find new audiences. But over a third of smaller live music venues have closed in the past decade and high business rates were a contributing factor of this decline.
The rate cut applies to 230 music venues and independent cinemas with a rateable value of less than £51,000 in England and Wales. It is estimated that each venue will save an average of £7,500 per year, totalling around £1.7million that can be directed back into the grassroots music scene.
In 2017, business rates increased significantly as music venues weren’t able to access the same rate relief as other small retailers, with some music venues seeing their rates quadruple. This issue has been a campaign focus of music industry bodies like UK Music for many years, with an ever-increasing digital music focus, business rates were seen as an out-dated and unfair method of taxation.
The 50% business rate cut will go some way to counterbalance the increase in royalty fees for playing recorded music that venues were required to pay from July 2019. The fee hike will take the average 3.9p per person per hour cost up to 9p in a sliding scale to 2023.
All venues that play recorded music, from a local disco in a village pub, to clubs, bars, hotels and restaurants all saw increased fees. However, venues that simply play background music aren’t affected. The fees are calculated in proportion to the size of venue so smaller venues pay less than larger ones but overall, this is another blow for music venues that already operate on very tight margins.
It can be difficult to keep up with the many issues and complexities that music industry businesses face, so it’s important to have sound support and an accountant that has specialist knowledge in tax and business consultancy in the sector.
CRM’s expertise in this field is long-standing, we’ve worked with retailers, manufacturers, musicians, record labels and studios so we understand the intricacies of revenue generated from royalties, merchandising and appearance fees.
If you own a business in the world of music or know somebody that does, why not contact CRM for specialist music sector support and accountancy advice on 01865 379272.