In more bad news for high street hairdressing businesses, the current 75 per cent discount to business rates – due to expire in April 2025 – will be replaced by a discount of 40 per cent, up to a maximum of £110,000. That means that many businesses will see their business rates nearly double.
Among the other announcements were: an increase in Capital Gains Tax, a freeze on fuel duty next year and the introduction of VAT on private school fees from January 2025.
In her opening remarks Reeves says the UK had voted for change, and that the Labour government has a mandate for a decade of “national renewal”.
She pledged “more pounds in people’s pockets” and improved living standards. The only way to drive economic growth is to “invest, invest, invest”, she added.
The government must “restore economic stability and turn the page on 14 years” of Conservative government, Reeves said. She says the Labour party has rebuilt the UK economy before and will “rebuild Britain once again”.
“In the grand scheme of things we are a niche industry that the government simply doesn’t understand, and we have become collateral damage” – Louise Howard-Long, Architect Hair, Leeds
However, hairdressing business owners and organisations reacted with dismay as Reeves set out her government’s taxation priorities, which come against a backdrop of higher debt following the pandemic, higher interest rates and inflation that has only recently returned to normal levels.
“It’s a particularly bad day for hairdressing and beauty businesses and the end of the road for apprentices and employment within our sector,” said Toby Dicker of the Salon Employers’ Association.
“After years of tireless campaigning with the Department for Business and HMRC and trying to show how tax policy directly affects apprentices, our industry, which is hit five times harder than retail by employment cost increases, has been broken.
“We have no alternative but to lay off apprentices and move all our staff to self-employment to have any chance of survival.”
(Toby has created an online calculator to help business owners understand the impact of the Budget. For access to the calculator, email admin@salonemployersassociation.co.uk)
Said Louise Howard-Long, owner of Architect Hair in Leeds: “Of course, people deserve to be paid well. But in the grand scheme of things, we are a niche industry that the government simply doesn’t understand, and we have become collateral damage. I fear for the future of hairdressing. More and more people are being pushed into the grey economy and at some point, the government will wake up and realise they’re missing out on a lot of income that they used to get from our industry.”
Sam Kendall, chief operating officer at salon booking, management and marketing system SalonIQ, also warned that today’s Budget might impact on hair businesses’ future hiring plans.
She said: “Experts have rightly dubbed this an effective ‘tax on jobs’, raising fears that it will stifle hiring, slow wage growth and limit pension contributions. For salon and barbershop owners striving to build a strong team and provide fair pay, this could be a critical setback, many having to reduce their team sizes and let non income producing apprentices go.
“In an environment where confidence is crucial for investment and growth, these changes risk sending small salon and barber businesses into a cycle of stagnation.
“Salons often take the hit in these situations, however the cost of running a business is not sustainable as costs keep rising. Salons will have no choice but to increase their prices to absorb these costs and should aim for an increase on their services of 4 to 5 per cent. Whilst we remain positive, some will sadly have no option but to close their doors.”
