Business rates are one of the most significant fixed costs for UK event venues, and one of the most poorly understood. Unlike most other taxes, business rates are based on the value of the property rather than the profitability of the business occupying it. This means that a venue operating at a loss pays the same rates as a thriving one in an equivalent property. For many venues, particularly grassroots music venues and community spaces, this creates a financial burden that is disproportionate to their ability to pay.
How business rates work
Business rates are a tax on non-domestic property in England and Wales (with separate but similar systems in Scotland and Northern Ireland). Every non-domestic property is assigned a rateable value by the Valuation Office Agency, based on the estimated rental value of the property on a specific valuation date. The rates bill is then calculated by multiplying the rateable value by the business rates multiplier, which is set annually by the government.
For the 2023 rating list, the standard multiplier in England is approximately 51p in the pound. This means that a venue with a rateable value of £50,000 would face an annual rates bill of approximately £25,500 before any relief is applied. For a small venue, this is a substantial sum that must be paid regardless of how the business is performing.
Rateable values are supposed to be updated regularly through revaluations to reflect changes in the property market. However, revaluations have historically been infrequent, meaning that some venues have paid rates based on property values that no longer reflect the current market. The government has committed to more frequent revaluations, which should help address this issue over time.
Why business rates hit venues hard
Several characteristics of event venues make business rates particularly burdensome. First, venues tend to occupy relatively large properties (they need space for audiences, stages, and back-of-house operations), which means higher rateable values. A venue with the same footprint as a retail unit pays comparable rates, but a retail unit typically generates higher revenue per square metre.
Second, many venues are located in urban areas where property values are high. A grassroots music venue in a city centre location may have a rateable value that reflects the area's commercial desirability, even though the venue's business model cannot generate the same returns as a restaurant or bar in the same neighbourhood.
Third, venues operate irregular hours and have variable income. A venue that is busy on Friday and Saturday nights but quiet during the rest of the week generates far less revenue per unit of property than a business that trades consistently throughout the week. Yet the rates bill is the same regardless of trading patterns.
Available relief
Several forms of business rates relief are available that can reduce the burden on venues. Small Business Rate Relief is available to properties with a rateable value below £15,000, with tapered relief for properties between £12,001 and £15,000. For a small venue that qualifies, this relief can be worth several thousand pounds per year.
Charitable rate relief provides an 80% mandatory reduction for properties occupied by charities and used for charitable purposes. Some venues have obtained charitable status or are operated by charitable trusts, enabling them to claim this relief. The process of obtaining charitable status is not straightforward, but for venues that can demonstrate a clear charitable purpose (such as education, community benefit, or cultural advancement), it can be transformative.
Discretionary rate relief allows local authorities to provide additional relief at their discretion. Some councils have used this power to support grassroots music venues and cultural spaces, but the provision is inconsistent across the country and is not guaranteed from year to year. A venue that receives discretionary relief one year may lose it the next if the council's priorities or budget change.
The campaign for reform
Music Venue Trust has been vocal in calling for reform of the business rates system as it applies to grassroots music venues. Their argument is that these venues provide cultural and community value that is not reflected in their commercial classification, and that the rates system fails to account for the distinctive operating characteristics of live music spaces.
Specific proposals have included a dedicated business rates relief category for grassroots music venues, similar to the relief available to rural businesses and community amateur sports clubs. There have also been calls for a fundamental reform of the business rates system to take account of profitability or turnover, rather than basing the tax solely on property value.
The broader business community shares many of these concerns. Business rates have been criticised by retailers, hospitality operators, and other property-dependent businesses as an outdated tax that penalises physical presence at a time when online competitors pay minimal property-based taxes. The government has undertaken several reviews of the business rates system, but fundamental reform has been slow to materialise.
Practical steps for venue operators
While waiting for systemic reform, venue operators can take practical steps to manage their rates liability. Checking the rateable value is accurate and challenging it through the Check, Challenge, Appeal process if it appears too high is a sensible first step. Many properties are overvalued, and a successful challenge can result in a reduced rates bill backdated to the start of the rating period.
Exploring eligibility for Small Business Rate Relief, charitable rate relief, or discretionary relief is essential. Many venue operators are not aware of all the relief options available to them, and the application process, while sometimes bureaucratic, can yield significant savings.
Considering the legal structure of the venue can also make a difference. A venue operated by a Community Interest Company or a charitable trust may qualify for relief that is not available to a standard limited company. The choice of legal structure should be made with professional advice, but it is worth exploring if rates are a significant cost pressure.
Business rates are one of those costs that venue operators must manage rather than control. They are set by external processes and based on property values that the operator cannot influence. But by understanding the system, claiming all available relief, and contributing to the campaign for reform, venue operators can at least ensure that they are not paying more than they need to. For anyone involved in running events at a fixed venue, the rates bill deserves careful attention.
