...but industry says he could go further

Chancellor Rishi Sunak has announced a package of tax breaks for the entertainment sector to help it recover from the pandemic.

In his Budget, he announced that hospitality and leisure business – including comedy clubs –  will get a 50 per cent business rates cut for next year, up to a maximum of £110,000.

And he will raise the levels of tax relief available to theatres and productions until 2024.

Speaking in the Commons, Sunak said: ‘To support theatres, orchestras, museums and galleries to recover from Covid the tax reliefs for all those sectors – from today until April 2023 – will be doubled. And they won’t return to the normal rate until April 2024. That’s a tax relief for culture worth almost quarter of a billion pounds.’

Theatre tax relief allows productions to claim back 25 to 25 per cent of eligible costs, but has a limited effect on the comedy industry as it applies only to a ‘play, opera, musical or other dramatic piece and the performers give their performances wholly or mainly through the playing of roles’

However, the move will help the wider live entertainment sector, with  The Society of London Theatre and UK Theatre  saying: ‘This initiative will support producers to keep costs down, secure greater investment and develop bold new content to drive the recovery of the UK’s world-leading theatre sector.’

A shake-up of alcohol duty has also been broadly welcomed, with the cost of beer and sparkling wine falling, but rises in stronger drinks.

Trade body UK Hospitality welcomed the Budegt, but called for more help. It tweeted: ‘Positive as these #Budget2021 announcements are, hospitality remains incredibly fragile, facing myriad critical issues, it is imperative the Government goes further to support businesses in our sector.’

Chief executive Kate Nicholls added: ‘The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all.’

The hospitality industry had also hoped Sunak would extend the reduced VAT rate for the sector, but he made no such announcement. A special 5 per cent rate was in force until October 1, when it was raised to 12.5 per cent – but this will end on March 31, and revert to the standard 20 per cent.

Nicholls said delaying the VAT increase would help combat the pressures of inflation, severe supply chain issues and chronic staff shortages.

She said: ‘Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector. The most effective way to achieve this would be to maintain the current lower 12.5 per cent of VAT for the sector.

‘The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.

‘Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country, but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.'

Michael Kill, chief executive of the Night Time Industries Association added: 'Today’s Budget had some important announcements that will enable the hospitality sector to continue to drive the economic recovery."

'The announcements on business rates relief for hospitality, the simplification of alcohol duties, and the cut in duty for draught beverages will be welcomed by thousands of businesses in the night time economy.

'This sector was devastated by the pandemic, with many businesses sadly not making it through, but the resilience we have shown to this point has been incredible.

'Despite this, businesses are still suffering from increased operating costs and with the potential for interest rates to go up being very problematic, as so many having taken on debt during the pandemic.

'To these businesses, the announcement’s today will be important in allowing them to continue to support the wider recovery, and ensuring a limit to the extent of increased prices being felt by consumers."

'Of course the improved forecasts for growth announced by the Chancellor today are good news, and the reopening of the night time economy has been a key part of this better-than-expected bounce back.

'We were disappointed that the Chancellor chose not to extend the 12.5 pwer cent rate of VAT on hospitality – this is a missed opportunity, and it will prevent those forecasts from improving further still.'

Published: 27 Oct 2021