The UK Government's 2024 Autumn Budget (the Budget) has identified "creative industries" as one of the eight sectors pivotal for economic growth. However, its financial provisions for the arts sector remain minimal.
Private sector impacts
The commercial art world saw little direct engagement from the Budget. The key issues affecting High Net Worth individuals and business owners instead came in the form of a Capital Gains Tax (CGT) increase, changes to business asset disposal relief, and investors' relief, as well as limitations on the Inheritance Tax business property relief.
Art collectors will be affected by the CGT rate hike and international art market participants by the abolition of the 'non-dom' tax regime, which, until April 2025, has allowed non-UK domiciled individuals to pay UK tax only on UK earnings. This is likely to require significant adaptation of wealth and business planning strategies. Meanwhile, art businesses, especially those that are family-owned, will face the impact of the various business asset relief changes. Furthermore, the above private tax developments could deter benefactors of museums and not-for-profit arts organisations, as their focus will be on restructuring their wealth and business management to achieve efficiency under the new regime.
Public sector developments
In the public sphere, the Government has pledged a 2.6% increase in funding for the Department for Culture, Media and Sport (DCMS), amounting to £2.3 billion. This boost is expected to support national museums and galleries through Grant-in-Aid contributions and provide a package of cultural infrastructure funding and capital investment for cultural organisations. The valuable Museums & Galleries Exhibition Tax Relief (MGETR) will also be maintained, albeit at a reduced rate of 45% for touring and 40% for non-touring exhibitions from April 2025.
At the same time, the Government is investing £3 million to expand the Creative Careers Programme, which aims to educate school children about career opportunities in the sector.
These developments are a first step towards mitigating the deficit accumulated in the public sector and exacerbated by the rising costs of running art institutions and programmes.
Local government
In advance of the Budget announcement, The Museums Association, Art Fund, the Association of Independent Museums, the English Civic Museums Network and the National Museum Directors’ Council made a joint submission to HM Treasury proposing measures required to keep the museum sector afloat. The submission requested supporting measures for civic museums, which have been severely affected by austerity, through measures such as emergency and long-term funding, Arts Council England funding, and capital investment. These were not addressed in the Budget.
Local government core spending is set to rise by £1.3 billion in 2025-2026, which is a welcome boost to the cash-strapped councils. Nevertheless, this provision does not earmark funds for culture or civic museums.
With one in five councils fearing bankruptcy in the next two years as of December 2023, some are contemplating selling off assets, including artworks, to balance their books. This strategy, however, is not without its own risk and councils require legal support to carry out deaccessioning in a manner that adheres to the Museums Association ethical guidelines and the given institution's terms of governance on the subject, falling foul of which may result in council-run museums losing accreditation and external funding, as illustrated by the well-publicised sale of an ancient Egyptian statue from the collection of the Northampton Museum and Art Gallery in 2014. Furthermore, deaccessioning art from museums and thereby depleting public collections, depending on the status of the given artwork, may impact the public's attitude to and interest in visiting museums.
The Government has also indicated that it may scrap the £100 million Levelling Up Culture and Capital Projects established in the 2024 Spring Budget, which was due to support organisations such as V&A Dundee and National Museums Liverpool.
The sector is moreover bracing for the increase in employers' National Insurance contributions from 13.8% to 15% from April 2025 and the rise in the National Minimum Wage for 18- to 20-year-olds from £8.60 to £10 per hour, which will put additional strain on museum budgets.
The Art Fund has now called for urgent action in response to the Budget, highlighting the dire position of regional museums and expressing the sector's disappointment at the lack of funding.
Overall, the Budget is a relatively tough one for both the private and the public art sectors. Nevertheless, it brings a promising recognition of the creative industries as a key sector in the UK economy, which one hopes will be reflected in future policy.