In September 2021, Society of London Theatre and UK Theatre submitted 10 proposals to HM Treasury to be considered for the Autumn Budget and Spending Review to support the theatre industry as the sector begins to recover.
Today (Wednesday 27 October 2021) the Autumn Spending and Budget Review took place and the Chancellor of the Exchequer, Rishi Sunak, announced that to “support theatres, orchestras, museums and galleries to recover from Covid” the tax relief for theatre will double until April 2023 which has been hailed an “incredibly welcome boost” for the sector.
The total tax relief for culture will be worth almost £250 million over the two years.
As well as the much-needed tax relief, a business rate cut of 50% for hospitality and leisure was also announced for next year. Theatres are included in the retail, hospitality and leisure businesses that will see a 50% discount on business rates, up to a maximum of £110,000 for one year.
While a lot of information has been published already, we are still reading through the finer details and are in contact with HM Treasury to discuss some of the proposals in more detail. We will publish updated insights on the Members’ Area of the website once we have them. In the meantime, if you have any questions please do get in touch with our Public Affairs team. A reminder that most of today’s announcements will affect England and Wales only, with separate budgets to be announced by the devolved administrations.
You can find all the documents relating to the Budget here, and the Government’s summary of its key announcements here.
SOLT and UK Theatre Chief Executive Julian Bird said in response to the announcement:
The Society of London Theatre & UK Theatre welcome the support that Rishi Sunak and HM Treasury have shown the theatre sector in the Autumn 2021 Budget.
The increase in rates of relief for Theatre Tax Relief from 27 October 2021 to 45% and 50% (for touring productions) will provide producers and investors with greater confidence in developing our world-leading theatre and drive the cultural recovery from the Pandemic. The relief will taper down from 1 April 2023, reducing to 30% and 35% and will return to 20% and 25% on 1 April 2024.
The temporary business rates relief for theatre buildings in 2022-23, a 50% relief up to a £110,000 cap per business, will provide venue operators with the cushion of a lower cost base as they reopen and develop an audience post-pandemic. The 100% improvement relief for business rates, providing 12 months relief from higher bills for occupiers where eligible improvements to an existing property increase the rateable value, from 2023 will encourage innovation and enhancement of our theatre buildings.
Finally, the welcome news that core funding for the Department of Digital, Culture, Media and Sport and Local Authorities is set to increase will reassure the venues and performing arts companies up and down the country that rely on their support in delivering culture to their local communities.
Over the next few days, we will be analysing the detail of the budget, continuing to work with government to promote the values of this £4.5bn sector as we get greater clarity on all the measures announced today.
Theatre Tax relief (details here)
The Government has announced that it will increase TTR under the following conditions:
From 27 October 2021, the headline rates of relief for the TTR will temporarily increase from 20% (for non-touring productions) and 25% (for touring productions) to 45% and 50% respectively.
From 1 April 2023, the rates will be reduced to 30% and 35% and will return to 20% and 25% on 1 April 2024.
From 1 April 2022, changes will be made to better target TTR and ensure that it continues to be safeguarded from abuse.
The published tax notice states that “the rises will apply where production activities commence on or after 27 October 2021”.
Our current understanding of this is that new productions - i.e. productions that have made no claims against TTR before today - will be able to benefit from the new rate of relief. Existing claimants will continue to benefit from the 20% or 25% relief. We also need to clarify how this works for re-casts etc.
HMRC and HM Treasury have offered to meet SOLT & UK Theatre to explain the new proposals in detail and we will publish further details after that meeting.
2. Business Rates Relief (England only – full details here)
The Government made several announcements on Business Rates which may have a positive impact on theatres and venues:
Businesses in the retail, hospitality, and leisure sectors will be eligible for a 50% relief, capped at £110,000 per business. We believe that only those operators who were eligible for business rates relief during 2020 will be eligible for this scheme, however we are seeking further clarity from the Government on this.
The planned business rates multiplier in 2022-23 has been frozen.
The government will introduce a 100% improvement relief, providing 12 months relief from higher bills for occupiers where eligible improvements to an existing property increase the rateable value. This could include installing CCTV or bike sheds, or increasing capacity.
3. Big investment in skills
As trailed in the media pre-Budget, the Chancellor announced a raft of measures to help upskill new and existing workers. Some of the key announcements which we believe will benefit our sector and help with our ongoing skills problems include:
An additional £1.6bn by 2024-25 for 16-19 year olds’ education in England. This provides additional hours in the classroom for up to 100,000 T Levels students by 2024-25.
Increased funding for apprenticeships – including extending the £3,000 apprentice hiring incentive for employers until 31 January 2022 – and supporting flexible apprenticeships (with more details to be announced by April 2022).
Investment in adult learning and upskilling through Skills Bootcamps and related programmes.
We will continue to work with colleagues and other bodies in the creative industries and cultural sector to ensure that creative education and skills benefit from this enhanced support.
Increased funding for DCMS and Local Authorities
There was much speculation ahead of the CSR that funding for some departments would have to be cut in the coming years. It was therefore very welcome to hear the Chancellor confirm that no department would have a cut to its budget for the next three years, and that key departments for our work – DCMS, Education, and Local Authorities – will all see their spending power rise in real terms over the Spending Review period.
We wait to see what impact this will have on funding for arms lengths bodies like the Arts Council England and how much money Local Authorities will have left to distribute after they fulfil their commitments to core areas of spending like social care.
2. Increased funding to Northern Ireland, Scotland, and Wales
The 2021 Comprehensive Spending Review provides an additional £8.7 billion per year on average to the devolved administrations over the CSR period through the Barnett formula, on top of their annual £66 billion baseline.
The Chancellor announced the first round of successful bids for the Levelling Up Fund which include several cultural projects. £1.7 billion has been allocated in the first bidding round of the Levelling Up Fund, of which 10.1% has been allocated in Scotland, 7.2% in Wales and 2.9% in Northern Ireland.