Budget day! Every political nerd’s favourite day of the year, replete with archaic traditions, including the right to drink booze in the House Of Commons, using a ratty old box made in 1860 to carry important government papers, and hours long discussions about who lives at which number of Downing Street. Fascinating for everyone, but mainly because it lets you know how bad your financial outlook is going to be for the next year.
Unless you fly around the place on private jets or have kids at a posh school, this year’s budget - for most people - didn’t deliver any nasty shocks. However, for many businesses the news was somewhat less rosy. In particular, the impacts of this year’s budget on parts of the music industry may be significant.
Given the UK government had been trailing most of the key bits of the budget since pretty much the day they took office in July, there wasn’t much yesterday that was a huge surprise.
Everyone knew that national insurance contributions were going to go up, but yesterday’s announcement clarified the fine detail: employers will pay 15% from April next year, rather than today’s 13.8%, and the National Insurance threshold, at which NI contributions kick in, will drop from £9100 to £5000. However, the employers’ allowance, which gives businesses a credit to use against their employer National Insurance contributions, will be increased from £5000 to £10,500.
This is likely to be the thing that has the most immediate impact on smaller music businesses and particularly those in London where median wages are higher than the rest of the UK.
For example, let’s take a micro business with six employees, three being paid £28,808 for a 40 hour week at the London living wage, and three being paid the London median salary of £44,370.
This year’s employer NI contributions, after deduction of the £5000 employers’ allowance, would be approximately £17,760. Next year’s contributions - after deduction of the £10,500 employers’ allowance - would be around £17,930. A fairly modest increase - but add more employees and higher salaries, and the increase in contributions will be more marked. For larger companies, the impacts could be significant.
However, this was not a huge shock to anyone, having been trailed for some time prior to the budget announcement. Nor was the annual rise in the minimum wage, which will increase from £11.44 to £12.21 an hour from April 2025.
That didn’t stop the Night Time Industries Association lashing out against the 6.7% increase for the UK’s lowest paid workers. In a statement sent out in advance of the budget announcement, Michael Kill, CEO of NTIA, said that the pending increase “feels like a distraction from the main budget”, before going on to say that “minimum wage hikes may seem like a win for workers, but for small nightlife and hospitality businesses already stretched thin, it’s at breaking point”. He then claimed that the result might be that night time businesses start “cutting shifts and jobs” so that companies can survive.
One of the biggest impacts on small businesses - and in particular businesses in the live sector, including grassroots music venues - is business rates. Currently, businesses operating in the retail, hospitality and leisure sectors are eligible for a 75% business rates reduction, up to a maximum of £110,000 a year. From April next year this is being replaced with a discount of just 40%.
What this means is that a medium sized music venue with a rateable value of £72,000 could see the amount it pays in business rates go from around £9800 a year now to £23,500 or more next year - an increase of £13,700.
Delivering the news during her budget speech, Chancellor Rachel Reeves said, “from 2026/2027 we intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties. I will today provide 40% relief on business rates for the retail, hospitality and leisure industry for 2025/26 up to a cap of £110,000 per business. Alongside this, the small business tax multiplier will be frozen next year”.
Speaking after the budget announcement, Mark Davyd, CEO of Music Venue Trust said that the change to rates relief would “create a demand for £7 million in additional premises tax” for grassroots music venues, and that 350 venues “are now placed at immediate risk of closure, representing the potential loss of more than 12,000 jobs, over £250 million in economic activity and the loss of over 75,000 live music events”.
Tom Kiehl, CEO of UK Music, added, “Business rates continue to present a big challenge for many creative businesses, from venues, record stores and studios. The continuation of business rate relief should be welcome, yet at a reduced rate of relief of 40% will mean further interventions will be necessary to support this delicate part of our ecosystem”.
Possibly the biggest impacts for the music industry - if you can call an absence of something an impact - is not what was in the budget, but what was left out of it. In particular, there was no announcement of a VAT cut for live music and festival tickets, something that a number of industry organisations have been calling for for some time.
Also missing was any acknowledgement of the significant economic impact that the music industry brings to the UK’s overall economic landscape.
Gee Davy, interim CEO of the UK’s Association Of Independent Music, said, “much more support is needed to alleviate the pressures on already super-squeezed independent labels and related music businesses”.
Calling for tax relief to support the “homegrown businesses” that are the “beating heart of music”, Davy said that independent labels are “the principal investors in emerging artists”, responsible for “80% of new releases”, as well as being “the UK music sector’s key employers” and playing an important role in “creating long-term sustainable creative careers”.
As a result, says Davy, the independent music business sector “urgently needs a tax credit scheme for music creation, like that which has been so successful in supporting the UK film sector”. Such a scheme would “drive growth in music communities across the length and breadth of the UK” as well as helping “grow employment and investment in emerging music” which would “reinvigorate the UK’s position in the global music market”.
Read the budget response statements from AIM, LIVE, MVT, NTIA and UK Music in full:
Gee Davy, Interim CEO, AIM
AIM commends the government’s actions to extend business rates reliefs for the hospitality sector. However, much more support is needed to alleviate the pressures on already super-squeezed independent labels and related music businesses.
These homegrown businesses are the beating heart of music – the principal investors in emerging artists and the UK music sector’s key employers, putting out 80% of new releases and creating long-term sustainable creative careers.
We urgently need a tax credit scheme for music creation, like that which has been so successful in supporting the UK film sector. This would drive growth in music communities across the length and breadth of the UK, keep options open for a diverse range of musicians, grow employment and investment in emerging music, and reinvigorate the UK’s position in the global music market.
Jon Collins, CEO, LIVE
We recognise that the Chancellor has had to make tough choices today. We welcome the retention of business rates relief but the decision to reduce this relief will increase costs on grassroots music venues already struggling to keep their doors open.
The live music sector is a key contributor to economic growth, generating over £6 billion in 2023, and creating positive social, cultural and economic impact across every city, town and village in the UK. It is critical that the next budget focuses on growth and enables sectors like live music to achieve their full potential.
Mark Davyd, CEO, Music Venue Trust
£7 million in new premises taxes places over 350 grassroots music venues at immediate risk of closure. Despite extensive briefing to HM Treasury, Department For Culture, Media And Sport and Department For Business And Trade about the negative economic, social and cultural impacts of the removal of the 75% business rate relief for grassroots music venues, the government has today announced that business rate relief will reduce to 40% from April 1st, 2025.
The immediate impact is to create a demand for £7 million in additional premises taxes from a sector that, in 2023, returned an entire gross profit across all 830 such venues in the UK of just £2.9 million. 43% of grassroots music venues in the UK made a loss in 2023.
Over 350 grassroots music venues are now placed at immediate risk of closure, representing the potential loss of more than 12,000 jobs, over £250 million in economic activity and the loss of over 75,000 live music events. Simultaneously with announcing this new tax demand, the government acknowledged the faults and inequities inherent in the business rate system, promising to deliver a new lower rate of taxes on physical, hospitality and leisure premises in April 2026.
The challenges around business rates and grassroots music venues have been known and accepted for over a decade. Changes in April 2026 are to be welcomed, but will be of no use for the hundreds of music venues that are now likely to be lost before this challenge is finally met with a full, long overdue reform. There are three possible solutions:
- The government could think again and act upon the extensive data it has received about the impact of unfair and unreasonable premises tax demands and restore the 75% rate relief for grassroots music venues.
- The government could create an emergency fund of a maximum of £7 million and allow venues facing the imminent threat of closure to draw down from this fund sufficient funding to meet the new tax demand.
- Every grassroots music venue in the country could install a temporary business rate levy of 50 pence applied to every ticket sold and used directly to meet the £7 million demand. This levy would need to be applied until the new business rate system is installed, predicted by the government to be on 1 Apr 2026.
Music Venue Trust believes that ticket prices should be kept accessible and is reluctant to encourage venues to adopt option three. Unless the government is willing to think again, it unfortunately may be the only possible option to stop a complete collapse of live music in our communities.
Michael Kill, CEO, Night Time Industries Association
We are in one of the toughest trading environments the UK has seen in decades for our sector, fraught with a legacy of challenges from previous crises. While the Chancellor has listened to our plight, the extended business rates relief is a minor concession amongst the array of tax increases and fiscal shifts, which will take some time to evaluate and consider regarding sector impacts. However, in simple terms, it is still double the contribution of the current business rates.
This relief will be immediately undercut by increased NIC employer contributions and thresholds, with increased individual employer contributions to businesses, net increase in alcohol duty, and overarching workforce increases, although rightly intended to support the workforce, will have severe repercussions for already struggling businesses across the sector.
This shows an acknowledgement of core businesses within nightlife but lacks consideration for the broader industry outside of bricks and mortar businesses, and the vital and diverse role our night-time economy plays within our communities and the UK’s culture and economy.
Minimum wage hikes may seem like a win for workers, but for small nightlife and hospitality businesses already stretched thin, it's at breaking point. These increases must be balanced and affordable for businesses, or we risk being counterproductive, cutting shifts and jobs as companies streamline just to survive.
This feels like a distraction from the main budget. Just like the Tory announcement on national living wage increases, we expected a more transparent and straightforward discussion, especially since these decisions directly affect people’s livelihoods and the future of businesses.
The fear across the sector is real and should not be ignored; the government’s lack of insight into how this impacts vulnerable sectors is deeply troubling.
Tom Kiehl, CEO, UK Music
The budget, Labour’s first in government for fourteen years, is a significant moment as we seek to grow the music industry over the course of this new Parliament.
The sector is made up of many small and medium enterprises. Increasing the employment allowance to £10,500 will hopefully help many of these music businesses, which contribute greatly to the industry’s economic contribution of £7 billion, navigate some of the challenges ahead.
Business rates continue to present a big challenge for many creative businesses, from venues, record stores and studios. The continuation of business rate relief should be welcome, yet a reduced rate of relief of 40% will mean further interventions will be necessary to support this delicate part of our ecosystem.
It is welcome to see government put further funding into the Creative Careers Programme, but as it takes forward a curriculum review to potentially expand creative education this needs to be supported by further investment to ensure we overcome inequality of opportunity to support the industry’s future talent pipeline.