Emergency budget: what it means for arts and culture sector

Organisations in the arts and culture sector and those employed within it are set to benefit from tax cuts outlined by Chancellor Kwasi Kwarteng.

Although the emergency mini-budget, presented in parliament today, contained no specific measures to support the arts and culture sector, changes to National Insurance and corporation tax rates are among a range of policies announced that will have direct implications.

However the plans have been immediately criticised by performers' union Equity which said the major issue of stagnating pay levels has been ignored.

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And the Society Of London Theatre and UK Theatre (SOLT) has said specific challenges faced by the sector have not been addressed.

Addressing MPs in the House of Commons, Kwarteng announced that a 1.25 percentage point rise in National Insurance contributions – which took effect in April this year – would be reversed.

The Treasury expects the move to reduce 920,000 businesses’ tax liabilities by £9,600 on average in 2023/24, with 28 million people across the UK keeping an extra £330 a year, on average, of their wages in 2023/24.

Meanwhile, a planned increase in corporation tax – which would see it rise from 19% to 25% will be cancelled, with the Treasury estimating this will put £19bn a year back into the economy.

Under the previous government’s plans, the rate of Corporation Tax was to increase from 19% to 25% from April 2023 for firms making more than £250,000 profit, around 10% of actively trading companies.

Income tax cut

Staff in the arts and culture sector will also see more money in their pockets as a result of the basic rate of income tax being cut a year earlier than planned – from 20% to 19% in April 2023, rather than from April 2024. The government says the move will mean 31 million people getting on average £170 more per year.

Kwarteng also said that government plans to simplify IR35 legislation – rules aimed at closing a loophole where some employees act as contractors to pay less tax than payrolled employees – which is likely to have implications for freelancers in the sector.  However, comprehensive details on how this will be done have yet to be provided.

And Universal Credit claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their work coach and take active steps to increase their earnings or face having their benefits reduced. 

This change is expected to bring an additional 120,000 people into the more intensive work search regime, but has exacerbated concerns about the way in which freelancers within the arts sector, who often experience fluctuations in income, will be treated.

Kwarteng also announced that VAT free shopping will be introduced for tourists, in a move likely to help visitor attractions around the UK.

'Ignoring biggest problem'

But Equity General Secretary Paul W Fleming said the Chancellor has ignored the biggest problem in the UK economy – that pay levels for working people need to rise urgently. 

"Instead, we are being presented with a raft of support and tax cuts for the wealthy, an attack on workplace democracy, and a tightening of the rules for Universal Credit claimants, which will only accelerate the rampant inequality in this country," he said. 

“The fact remains that despite the measures announced today, the structure of Universal Credit remains broken. 

"It does not 'Make Work Pay' contrary to its aims, and it does not provide an adequate safety net to help the lowest-paid and those at the start of their careers stay in work.

"Equity members will be organising for resistance to these policies, not resilience to their effects. Unless these packages improve, hot union summer will become a cold winter of discontent.”

Hannah Essex, Co-Chief Executive of SOLT,  said the Chancellor missed the opportunity to commit to supply-side incentives, such as maintaining the higher rate of Theatre Tax Relief.

"Independent economic modelling undertaken in 2021 revealed that, with the right fiscal incentives, by 2025, the UK’s Creative & Cultural Industries could contribute £132.1bn [in gross added value] – more than the financial services, insurance and pension industries combined," she said.

"We hope that the government will recognise the strength of the theatre sector as an entrepreneurial and SME-led economic driver, locally, nationally and globally. 

"We look forward to working with the government to ensure that theatres and performing arts organisations are best positioned to contribute to their Growth Plan."