Chancellor Rishi Sunak is being urged to abandon a VAT hike on concert and live event tickets that is due to kick in on April 1.
The warning comes ahead of the Chancellor’s Spring Statement on March 23 when he will outline a mini-Budget.
UK Music chief executive Jamie Njoku-Goodwin has written to the Chancellor to highlight the “hugely damaging” impact that a planned Treasury increase in the VAT rate on gig tickets could have on millions of music fans and the music industry.
At present, VAT is charged at 12.5% on tickets for live events following a reduction during the pandemic. However, the Chancellor is planning to restore the VAT rate to 20% on April 1 in a move that promoters and music industry chiefs are concerned could force a rise in ticket prices.
Music industry leaders are now calling on the Chancellor to abandon the VAT rise as live music attempts to return to normal after an absence of almost two years due to the Covid-19 pandemic.
The call on the Chancellor to ditch the VAT rise is part of a six-point plan for the music industry outlined in Jamie Njoku-Goodwin’s letter to Rishi Sunak.
Other measures include extending the current 50% discount on business rates on music venues, and more funding to help British performers touring the EU to navigate extra costs and post-Brexit red tape.
UK Music is calling for a Music Export Office to help boost sales of British music abroad, which dropped 23% from £2.9 billion in 2019 to £2.3 billion in 2020 due to Covid-19.
The collective voice of the music industry also wants music to benefit from the same type of tax breaks as UK film, TV and video firms enjoy, to help attract inward investment and nurture new talent.
UK Music is also seeking more help for the self-employed, who make up more than two-thirds of the UK music industry.
The planned hike in VAT could not come at a worse time for millions of music fans and the live music industry
UK Music chief executive Jamie Njoku-Goodwin said: “The planned hike in VAT could not come at a worse time for millions of music fans and the live music industry, which was shut down for almost two years due to the pandemic. We saw during those grim periods of lockdown just how important music was to people’s mental health and how it helped us get through some really tough times.
“Pushing up VAT to 20% would be hugely damaging for the music industry and leave music fans facing a cost of gigging crisis. The rise would come at a time when we are rebuilding post-Covid-19, with hundreds of concerts planned over the next few months.
“We would urge the Chancellor to give people who already face rising prices and grim headlines every day a little lift by ditching the ticket tax and abandoning the VAT hike. Dumping the planned VAT hike would help keep ticket prices down for fans and help music businesses pay down debts they built up during the pandemic, generate thousands of new jobs and nurture new talent.
“It would help the music industry continue to recover and rebuild after the Covid-19 pandemic, which wiped out around one in three jobs in our sector.”
Pre-pandemic, the UK music industry contributed £5.8 billion to the UK economy and supported almost 200,000 jobs, according to the latest figures from UK Music.
However, the total number of UK music industry jobs plunged by 35% from 197,000 in 2019 to 128,000 in 2020 due to the pandemic-enforced shutdown of live music.
It meant hundreds of festivals and live music events - including Glastonbury - were cancelled after the first in a series of lockdowns was imposed in March 2020.
The UK already has one of the highest rates of tax for hospitality in Europe. In France and Spain, the VAT rate is set at only 10%. It is just 7% in Germany and 6% in Belgium.