TAX FREE: Busted plays at the 100 Club in London in 2018. (Getty Images)

Government grants 50% break to some clubs in England and Wales

After four years of lobbying the U.K. government on behalf of the country’s grassroots music venues, business taxes for small and medium-size venues in Wales and England have been slashed by 50%.

What is more, the Music Venue Trust has found a so-called localism relief regulation by which it has managed to free one of the oldest grassroots music venues of Europe, London’s 100 Club, from having to pay such taxes at all.

But first things first: The decision to slash business taxes, called business rates in the U.K., by 50%, according to the trust, releases over 1.7 million pounds, or $2.2 million, back into the sector, which endured 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 pounds a year on average.

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

The U.K. government specifies that the existing business tax discount applies only to venues up to a rateable value of 51,000 pounds, or $66,600. About 25% of Music Venue Trust members are valued above the threshold, the trust’s strategic director, Beverley Whitrick, told 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 said that the trust had been looking into the localism relief for a while and that the first venue to secure it was the iconic 100 Club in the heart of London.

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

Even if the club’s valuation were to rise in the future, which it’s likely to do, it won’t be required to pay.

“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 said.

A venue’s valuation is usually evaluated by either looking at its revenue (also known as turnover in the U.K.) or its square footage.

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

Where venues are evaluated based on square footage, that evaluation usually changes with the value of the area in which they are located. 

The Fleece in Bristol is an interesting case: It sits in Radcliffe, an area that was underused until recently, when the construction of new apartments substantially raised values.

“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 said.

The Fleece’s valuation was raised in 2014 more than 300% to 72,000 pounds 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 said.

“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 8 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 mused.

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’t do. You can’t appeal, you just have to accept it,” Sharp said.

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

Sharp is optimistic that Bristol City Council will follow the example of Westminster Council because 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 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 still 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.