UK Music is working with members to develop proposals for a tax credit that would incentivise investment in the next generation of world class music talent in the UK.
Specific tax incentive schemes for music production or composition are common in other countries with strong music sectors notably France, many US and Canadian states, Australia and Ireland. The UK currently has no such incentive. This puts the UK at a competitive disadvantage.
In response, UK Music is developing proposals for a tax credit that would incentivise investment in the next generation of world class music talent in the UK, and encourage inward investment into capacity building, professionalisation, investment and growth that would be especially useful to our large number of SMEs, microbusinesses and sole traders.
This would correct existing market failures within the UK sector, help re-capitalise COVID-19 stricken businesses looking to bounce back, boost the attractiveness of investing in UK based content against our international competitors, support new UK talent and incentivise activity in all parts of the UK commercial music sector.
Fiscal Incentives Through Tax Relief
Unlike many other creative sectors in the UK, such as film, TV, video games and animation, the music industry does not currently benefit from a fiscal incentive, such as a tax relief scheme.
The creation of a tax relief to stimulate UK content creation and attract inward investment would be welcomed by the music sector and help support exports, create new talent, build, and retain skills, and boost the economy across the UK.
It could incentivise investment in the next generation of world class music talent in the UK, and encourage inward investment into capacity building, professionalisation, and growth.
By mandating the use of UK based companies and freelancers for producing the work we can ensure UK business feature through the supply chain benefit.
A fiscal incentive would also be useful to the large number of small and medium-sized enterprises in the sector who need support at this time.
Specific tax incentive schemes for music production or composition are common in other countries with strong music sectors, including France, Australia, Ireland, and many North American states.
Without a tax relief on offer, the Government risks putting the UK at a disadvantage and will miss the opportunity to gain a competitive edge against nations without such an incentive.
Permanent Reduction in Hospitality VAT
The Government announced in July 2020 that it intended to apply a temporary 5% reduced rate of VAT to certain supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions.
This reduction acknowledged reducing VAT can support businesses, protect jobs and boost the economy. Yet the Government is raising VAT in stages to 20% in March 2022.
We believe VAT should be kept at a permanently reduced rate for hospitality to incentivise recovery in the live sector. A permanent VAT freeze make staging events more profitable, thereby encouraging more events to be organised.
By keeping VAT low the Government will be allowing more money to be invested in venues, which will help them reduce pandemic debts.
Such a policy would therefore incentivise investment in the grassroots of the sector. It would also allow continued employment for the large number of people who work in live music.