creative industries tax relief

Covid-19’s Impact on the Creative Industries

On the 26th of March, 2020, the first UK lockdown brought livelihoods, careers and lifestyles in the ways we knew it to a dramatic standstill, it was something that none of us had anticipated, expected or thought was even possible. Shops, pubs, restaurants, gyms, cinema’s, theatres and more were forced to close their doors in the battle against Coronovirus, causing detrimental damage to business owners, and the overall UK economy. Many UK businesses were already struggling to stay afloat due to inflation and soaring business rates, but the pandemic lead to mass layoffs and many business closures for those that could not survive an economic shock of this size, in addition to it’s impact on public health. 

One of the worst-hit industries that greatly suffered due to the Pandemic is the performing arts sector. The arts are integral to the social, civic and economic wellbeing of the UK, playing an important role in contributing to the UK economy through tourism with 9.2% of all tourists visiting the UK visiting a theatre musical, opera or ballet. It also has contributed greatly to employment and education; even having extensive participation to childhood and youth, being linked to social and emotional outcomes for people later on in life. Whether it was a theatre or an art 

gallery, the tight lockdown restrictions meant that these venues would not be able to open their doors until it was deemed as safe. 

The Performing Arts sector relies on physical audiences, and due to social distancing restrictions, no rehearsals were possible to take place as well as the venues were unable to open, forcing many arts institutions to rethink their traditional ways of entertaining the general public and to digitalize. 

Live Music and Theatre

The UK’s music industry thrives from buzzing crowds with people filled with passion for their favorite artists, but due to the Covid-19 social distancing rules, this was no longer possible. Many music venues, producers, artists and more suffered greatly due to the Pandemic. Virtual experiences and streaming platforms were projected to be on the rise and levitate to new heights of popularity, yet it was reported by Spotify that streams of the world’s biggest hits were actually down 11%. It has been extremely hard for the sector to recover, with 1 in 3 jobs reportedly lost within the live music sector due to venue closures, employment levels plummeted by 25% from 2019’s all time high of 197,000 down to 128,000 in 2020. Many workers that are self employed within the Music Industry were also not covered by the Government’s support schemes, and to top it off Brexit has affected the industry further as it’s effect on artist’s mobility. 

“With the live industry now having to deal with the appalling impact of Brexit on artist’s mobility, now is the time for this government to step in and provide realistic and effective support for an industry that was once the envy of the world and is now struggling to survive,”  – MU General Secretary Horace Trubridge

Music has always been an integral part of many people’s lives, in a recent report, 74% of participants reported that music is very important to their quality of life. The UK itself listens to 60 billion hours of music every year, which is equivalent to 7 million years of music. 

When it comes to the detrimental effects that the pandemic has had on the Theatre, venues such as New York Broadway and the London West End closed their doors to customers for the foreseeable future while UK lockdowns were put in place. It has been reported in December, 2020 by the appg that the box office lost £1.04 billion of revenue, with producers scheduled performances following guidance suffering millions of pounds in additional losses from the November lockdown in 2020 due to the absence of private market and government-backed cancellation insurance. The industry requested a Government-backed insurance scheme, expansion of tax reliefs for the creative industries and further actions to be taken in terms of reduction of VAT and more Covid tests for employees. 

Film, TV and Cinema

The Covid-19 pandemic is still subjecting the Film, TV and Cinema industry to extensive financial damage due to all productions coming to an abrupt halt in the March 2020 lockdown, film festivals were cancelled and all cinema’s closed their doors to the public. Never before have such detrimental effects been evident on the Film and TV  industry that thrives through delivering entertaining experiences to society across the globe, freelancers became jobless and with lack of Government support and isolation for those working in the industry, it has been described as a ‘collective trauma’ by the industry. 

“Those who operate as one-person limited companies make up 28%, and those who work PAYE on consecutive, short and fixed-term contracts make up the remaining 36%. This remaining 64% of our freelance was excluded from SEISS.” – Film TV Charity

In terms of the damage done to the cinema’s, there were already rising concerns that the new streaming era would take the industry out whole. With large streaming platforms such as Netflix, Hulu, Amazon Prime and Disney Plus becoming the new norm, it was expected that the combination of Covid-19 and these streaming powerhouses would never allow the Cinema industry to bounce back, but it is evident that this is not the case. Hollywood blockbuster movies such as Suicide Squad, Space Jam: A New Legacy and Jungle Cruise starring the Rock raked in more than two-and-a-half times Vue’s weekly numbers for the past 18 months. Odeon Cinemas also exclaimed that during August 2021, they saw the biggest turnout they had experienced since the lockdown restrictions allowed customers back into their Cinemas.   The success proves just how popular Cinema’s remain to be, but the damage from UK lockdown’s has still reportedly ‘bruised’ the industry. 

“The fact we are seeing almost pre-pandemic levels today is a positive sign for the future. But it is important to remember as an industry we are still pretty bruised from the past 18 months. It is going to take a period of time before we corporately recover.” – Tim Richards (Chief Executive of Vue Cinemas)

The TV industry is also recovering from the damages done by the Pandemic. The impact of it saw higher numbers of daily viewers watching for longer periods of time, averaging at 3 hours and 32 minutes per person (18 mins higher than the time spent in January 2020), but the number of people watching broadcast TV decreased by 3% between January 2020 and January 2021. TV broadcasts such as the News gained more popularity due to society relying on BBC News, ITV News and Channel 4 News to keep them up to date with the latest Covid-19 news. The PM’s statement commencing on the 4th of January 2021 was the most watched programme that month, with over 14 million people watching BBC One, but since the PM’s announcement of the third lockdown, viewing greatly declined. Independent producers have suffered the most from the economic turmoil that the Pandemic brought, that seems to stem from lack of Government support for indie producers, with countries such as the U.S, France and Italy agreeing to provide a financial lifeline for their creative industries. The U.S was providing state funds to Hollywood to ensure that it did not go under, whereas the UK has been described as being “in a completely different environment”.

It is apparent across industries that large TV, Film & Cinema firms can easily stay afloat, but when it comes to independent producers and freelancers, their futures are more fragile than ever before. The risk of large streaming platforms is a grave risk, but also the huge financial loss that the industry faced due to the Pandemic is still leaving a large gap across all of these industries. 

Museum & Gallery

The Museum and Gallery industry have faced numerous challenges following on from the devastating Covid-19 Pandemic. Many of the UK’s Museum and Gallery venues, exhibitions, education programmes, community events, fundraising planners and their organizations face an uncertain future due to temporary closures of cultural venues all over the country. The closure of these venues has resulted in the industry having to rethink it’s traditional structure, coming up with innovative and radical ideas to help the industry stay afloat. Visit’s to the world’s top 100 museums fell by 77%, the Louvre in France managed to retain it’s position as the world’s most visited Museum thanks to the Leonardo Exhibition, but it still suffered an estimated income loss of more than £90m, but in terms of UK venues, the Tate Modern in London suffered a massive £56 million loss in revenue.

In a recent study, the Art Fund asked Museum & Gallery directors, museum and gallery professionals and representatives from across the globe how the Pandemic had affected them and what they would need to recover. The costs of managing large outdoor spacing following social distancing has been reported to possibly outweigh the benefits of reopening their doors, due to the highly expensive task of managing hygiene in highly interactive areas, which most art galleries and museum’s take pride in hosting. The main concern reported is to be able to attract visitors back into the venues and the wellbeing of staff following the Pandemic, large reductions of cash flow have a knock on affect not just on the venues themselves in terms of upkeep, but also on staff quality of life and offering them the support that they need.

How did the Creative Industries adapt?

In order to keep the creative industries afloat, innovative changes are paramount. With tragedies such as the Pandemic, the creative industries are seen are important to society’s everyday quality of life. While Biomedical science firms are working hard to tackle the ever changing variants of Covid-19, cultural and creative industries can assist with tackling social and economic efforts. Research and Development is extremely important for every sector, with many businesses thriving and paving the way to our future societies, and this emphasis on R&D needs to be apparent in the world of the creative arts also. 

Traditional creative practices need to be met with next-gen technology in order to pull the UK’s creative industries out of turmoil, giving global audiences better access to our works through free streaming and previously recorded performances of Orchestra’s and Plays, giving producers and consumers broadened digital access by continuing to work with streaming platforms such as Netflix to stream performances, overcoming entry barriers for freelancers that are trying to break into the digital creative market and helping smaller organizations to thrive in the harsh industry climate. Digitalization is extremely important for the industries to stay ahead of the game and to thrive, with platforms such as Social Media playing an integral part of keeping the Theatre industry afloat during lockdowns, performances such as Mamma Mia were carried out by cast members for audiences to watch live on their mobile devices and live music concerts from top artists drew millions of views across social media.

When it comes to overcoming venue issues, drive-in performances and socially distanced spaces can help the industry be prepared for any further Pandemic’s or problems that society may face. Performances were carried out with no audience and shown on streaming powerhouses such as Amazon Prime and Netflix for users to watch, and they were met with good reception, this way of performing to audiences has the potential to reach global audiences, larger than ever before which may give industries such as Orchestra and Theatre a well needed cash injection. 

What is being done to help the Creative Industries stay afloat?

Since the start of the Pandemic, many things have been put in place by the UK Government to assist these industries. Tax Relief’s have been extended for the creative industries, giving them access to larger cash pots to help them continue to trade. The Creative Industries Tax Relief provides 8 different avenues of Government Aid, which are Animation Tax Relief, Children’s TV Tax Relief, Film Tax Relief, High-End TV Tax Relief, Museum & Gallery Tax Relief, Orchestra Tax Relief, Theatre Tax Relief, and Video Games Tax Relief. Organisations can apply for the scheme themselves or through the use of a professional (which is preferred to ensure precision and maximized claim amounts), and it even offers support for businesses that are making a loss allowing them to either surrender it or possibly convert some or all of it into a payable tax credit. In the 2021 Autumn Budget, it was announced that the rates of tax relief will be as much as doubled for industries such as Theatre & Museum and Gallery offering a new lease of life for these venues. 

There are also extensions for Business Rates Relief, more support offered for freelancers working within the creative industries, comeback campaigns across the country to try and entice crowds back into our beloved cultural spaces supported by re-opening roadmaps to clearly outline when crowds were able to return. There have also been better Government-backed insurance schemes, continued reduction of VAT across the board and better Covid-19 facilities for testing, to reduce outbreaks of the virus within the workspace. 

To find out more about Creative Industry Tax Relief, don’t hesitate to get into contact with us to discuss your eligibility, our team of specialists will get to know you and your business from the inside out to meet your business goals and understand what you would like to get out of the relief.

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