Huge Week In Tax News For U.K. Grassroots Music Venues

After four years of lobbying the U.K. government on behalf of the country’s grassroots music venues, politics finally budged and slashed business rates (called business taxes in the U.S.) for small and medium-sized venues in Wales and England by 50%.

What is more, MVT has found a so-called localism relief regulation, via which is has managed to free one of the oldest grassroots music venues of Europe – London’s iconic 100 Club – from having to pay business rates forever.

But first things first.

The decision to slash business rates by 50%, according to the MVT, releases over £1.7 million ($2.2 million) back into the sector, which has been enduring the closure of 35% of U.K. grassroots music venues in the last decade.

The new rate will allow 230 grassroots music venues across England and Wales to reduce their overheads by £7,500 per annum on average.

MVT counts more than 600 venues across the U.K. among its members. The reason the rates relief “only” applies to 230 venues in England and Wales at the moment is that separate agreements with the governments in Scotland and Northern Ireland need to be reached.

What is more, as the U.K. government specifies, the existing business rates discount only applies to venues up to a rateable value of £51,000 ($66,600).

Around 25% of MVT members are valued above the £51,000 threshold, the Trust’s  strategic director Beverley Whitrick tells VenuesNow.

But MVT has found a solution for those venues, too. It was hidden in a regulation that allows for a so-called localism relief.

Whitrick says, MVT had been looking into the localism relief for a while, and that the first venue to secure it was the iconic 100 Club right in the heart of London.

In talks between Westminster Council, London’s Night Czar Amy Lamé and MVT, it was determined that 100 Club was culturally important enough to the local area, Westminster, to warrant a 100% business rates relief.

That’s right. 100%. Even if the club’s valuation rose in the future, which it’s bound to do, it won’t have to pay a penny.

“Having achieved that for the 100 Club, it now means that we can refer to that and encourage other councils to look at localism relief for venues,” Whitrick says.

A venue’s is usually evaluated by either looking at its turnover or its square footage.

Some venue operators may put on a festival outside their normal programming, or program shows in bigger venues, or just host more music than in the previous year. All of these activities will result in a higher turnover, but not necessarily a higher profit.

Where venues have been evaluated based on square footage, that evaluation usually changed depending on the value of the area they are located in. 

The Fleece in Bristol is a really interesting case: Redcliffe, the area where it is located in, used to be very underused until quite recently, when a lot of new apartments were built in that locality, substantially raising the value of the area.

“What you’ve got is venues that are in previously quite industrialized or unpopular areas, now find themselves in the heart of a gentrified area, and therefore the perceived value of the property goes up, even though the activity and the money it earns are exactly the same,” Whitrick explains.

The Fleece’s valuation was raised in 2014, from £17,800 to £72,000 annually, according to Chris Sharp, the venue’s owner. 

“I had no idea why. We had a rates relief guy look at it, but [we couldn’t] find the reason,” he tells VenuesNow.

“It could be because our turnover increased, because we were promoting a lot of shows in other venues. So, as a business, the amount of money coming through the till was a lot higher, but then, if you’re promoting bands, 80% of that goes to the bands, if they’re on an 80/20 door split.

“So, if it’s based purely on turnover and not profit, that’s totally illogical.”

2014 was the year The Fleece put on a lot of touring bands. “At the time, we were promoting a lot of shows in-house, selling tickets at 20 quid to pay a band eight grand and maybe make a thousand ourselves if the gig does really well, and the other gigs losing thousands, because it didn’t sell as well as we hoped, and we were stuck with the guarantee. So, the actual business itself wasn’t making much profit, but the turnover went up a lot. So it could be, because of the turnover,” he muses.

It could also be the fact that Redcliffe has been redeveloped, and there are now many other businesses and residential homes around. 

“The problem with rateable values is, they can just throw an arbitrary number at anyone, and there’s nothing you can do. You can’t appeal, you just have to accept it,” says Sharp.

The Fleece’s valuation means that it’s not eligible for the 50% rates reduction. However, it could be eligible for the 100% localism relief.

The reason Sharp is optimistic that Bristol City Council will follow the example of Westminster Council, is the fact that it’s a left-wing council. The political left is usually said to value culture more than the political right, which is in power in Westminster but still saw it fit to relieve the 100 Club of its duty to pay business rates forever.

It’s been a schizophrenic week for Sharp: “My main reaction to what’s happened this week is elation for music venues around the country, because as an owner of one myself, I’m incredibly happy for everyone.

“But incredibly frustrated, that because of this onerous quadrupling of our rates, which was so unfair four or five years ago, we’re actually above the threshold, and we get nothing. Everybody else is getting 50% reduction in the actual amount they pay, and we’re stuck with an incredibly high amount.

“But I am encouraged by the fact that Westminster Council have chosen to use this never-before used reason to give a music venue, which is seen as important within the culture of that town, a complete 100% relief. Even if their rates get quadrupled to a quarter of a million, they sill pay nothing. They’re protected.

“Now Bristol City Council has the opportunity to do the same thing with The Fleece, who they’ve always said they support.” 

Bristol’s politicians constantly emphasize, how important Bristol’s musical heritage, which includes its iconic venues, is for the attractiveness of the city. Now the precedent’s been set to actually secure this heritage for good.