Brexit’s bum note: UK orchestras hit by new touring tax

LONDON — British musicians have already been hit hard by Brexit, with tours to the continent bogged down in work permit applications and customs paperwork. Now things are about to get worse.

A new Brexit tax hike set to hit U.K. orchestras later this year could make trips to Europe “unviable” and undermine their activities back in Britain, the trade body representing the musical ensembles is warning.

From April 1 this year, U.K. orchestras crossing the Channel to play will no longer be able to claim tax relief on performances in the European Economic Area, as they are currently allowed to do.

The U.K. government is making the change to bring Britain into line with World Trade Organization (WTO) rules – required because of the U.K.’s exit from the EU single market.

The tax hike is just the latest in a string of blows to British musicians following the U.K.’s departure from the EU.

New rules about taking instruments across borders, work visas, and “cabotage” requirements on transporting equipment by lorry have led to warnings that smaller British artists are increasingly finding it impossible to tour.

Now Britain’s orchestras say their incomes are at risk because of the latest change, with knock-on effects on investment and performances at home.

“The proposals to remove EEA costs from qualifying expenditure is another post-Brexit barrier to touring in the EEA, which risks making European touring financially unviable,” Hanna Madalska-Gayer, head of policy at the Association of British Orchestras, told POLITICO.

“Foreign-earned income also allows U.K. orchestras to invest in and develop work on and off the concert platform here in the U.K., so we will feel the impact domestically as well.”

WTO fears

Orchestras in the Association of British Orchestras made 150 visits to 22 different EEA countries in 2019, with international touring accounting for over 20 percent of orchestras’ earned income — 60 percent of which comes from EU tours alone.

The 10 percent tax relief can currently be claimed on performances in EEA countries — the EU, plus Norway, Iceland, and Lichtenstein. To qualify, a group must be an ensemble with a minimum of 12 instrumentalists performing live without “electronic amplification.”

The cost of the policy is relatively small. Ministers say that since 2016 it has cost the U.K. Treasury £75 million across all claims, including domestic performances in the U.K.

Now Britain’s orchestras say their incomes are at risk because of the latest change, with knock-on effects on investment and performances at home | Jeff J Mitchell/Getty Images

But under WTO rules, countries cannot give special treatment to trade with another state without offering it to all WTO members — the so called “most-favored nation” principle. The Treasury believes this means the tax relief can now only apply in the U.K.

Special treatment can be given to countries only as part of a formal free trade agreement — but the relief is not included in the Brexit Trade and Cooperation Agreement signed between the EU and the U.K..

A spokesperson at the Treasury said the change would bring orchestral tax relief into line with similar reliefs for film, TV and video games.

The U.K. finance department argues that the change is both necessary to comply with WTO rules, but also that it is appropriate to “refocus” orchestra tax relief on the U.K. following Brexit.

A government spokesperson said: “We are supporting the U.K.’s brilliant artists to adapt to the new arrangements and we continue to work across the EU to support our musicians to tour.”