A new survey conducted by SOLT & UK Theatre has found that a higher rate of Theatre Tax relief drove the employment of nearly 15,000 people in the last financial year.
Manuel Harlan
The government's removal of a higher rate of tax relief for theatres will lead to a 30% drop in the number of productions staged, according to a new report.
Respondents to a survey conducted by the Society of London Theatre (SOLT) & UK Theatre said that if the higher rate of Theatre Tax Relief (TTR) is lost, they expect the number of staged productions and playing weeks to be down 17% next financial year (2024/25), dropping by up to 30% in 2025/26.
The theatre employment bodies questioned 75 SOLT & UK Theatre members, including organisations and individual practitioners from across the UK, about the impact of higher rate TTR. SOLT & UK Theatre have called on the Chancellor to make the higher rate permanent in his Spring Budget.
READ MORE:
- Theatre productions paused amid fears of tax law changes
- Hunt extends tax relief for theatres and museums
Introduced as a temporary measure to help support the culture sector in 2021, the 44-50% rate of TTR is due to drop to an interim rate of 30-35% on 1 April 2025 before returning to 20-25% on 1 April 2026. The government previously extended the higher rate last March in a move that was welcomed by the sector.
Over the last financial year, the survey found that TTR had been claimed against 558 productions, with a total value of £85.7m driving the employment of 14,712 people.
More than 80% of respondents said they could hire more employees because of the higher rate, while 69% said it had increased business for their suppliers.
Of the shows they staged, 83% of respondents thought higher TTR enabled productions on a grander scale, and 65% produced more shows than they would have at the lower rate.
Outside investment
One of the respondents called TTR a “lifeline for the sector”, coming at a time when many are struggling with inflationary pressures and a challenging economic environment, impacting the box office and the potential to raise funds elsewhere. Increasingly, venues nationwide are also facing cuts in local authority funding as councils struggle with rising debt.
Higher TTR left 85% of respondents feeling better able to absorb “cost shocks” and 77% said it meant they could avoid depleting their financial reserves.
A key finding was TTR's knock-on effect on many theatres' ability to raise outside investment. More than two-fifths of organisations said that having a higher rate meant they felt more able to raise domestic investment, and 29% are more confident about attracting international investors.
Nearly a third of respondents had secured funding from outside of the UK for productions which benefited from TTR in the last year. Of those, 60% considered TTR an essential factor in securing international capital investment, and 27% said it was important.
Levelling up
Considering the impact that the drop-down in relief will have over the next two years, the report said the reduction in productions staged and playing weeks will have “a direct impact on local economies” with a “disproportionate impact on Levelling Up areas.”
Nearly half of the touring organisations who responded to the survey said they would have less capacity to export/tour internationally if rates were reduced, with an anticipated average 27% decrease in audience reach.
One respondent said: “Our existing tour is able to visit smaller venues that would otherwise be loss-making if not for the enhanced TTR.”
Another added, "Touring children’s theatre would be less able to go to many of the levelling up regions where guarantees tend to be lower."
'Take risks and be bold'
"The higher rate of TTR is a highly effective economic stimulus, enabling the sector to take risks and be bold," said Claire Walker, Co-Chief Executive of SOLT & UK Theatre.
“Our research shows that losing the higher rate will lead to fewer and smaller productions, which in turn means fewer jobs and a smaller contribution to local and national economies.
"That's why we urge the government to retain the higher rate, which is fundamental to the success and growth of our world-class theatre sector and which will enable our members to continue to deliver enormous benefits throughout the UK.”
Eleanor Lloyd, President of SOLT, added: “The higher rate of tax relief directly enables the creation of groundbreaking productions, the hiring of more talent, and brings exhilarating live shows to audiences.
"It is a fundamental enabler of the UK’s world-leading theatre, which simultaneously grows the economy and delivers transformative social good to communities across the country.”
 |