As new research highlights the financial pressures facing employers across the sector.
Published:According to a report in The Sunday Times, small independent businesses, including hairdressers and beauty salons, could be exempt from business rates under tax changes expected to be announced in the upcoming Budget.
Prime Minister Andy Burnham is reportedly expected to honour a commitment made over the summer to increase the threshold at which small businesses begin paying business rates from £12,000 to £18,000.
Fiona Johnston, president of the NHBF, welcomed the prospect of financial relief for salon businesses.
“We welcome any tax reduction for our sector at a time when a significant proportion of salons are struggling,” she said.
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The potential changes come as the sector continues to navigate rising employment costs and challenging trading conditions.
The NHBF’s State of the Sector Employer Survey, published in September, found that 39.7% of employers across the hair and beauty sectors had reduced their workforce in the previous three months. By comparison, just 4.8% had increased their staff numbers.
The figures highlight the difficulties facing a sector dominated by small and microbusinesses, where rising wage bills can place considerable pressure on profitability.
According to the Low Pay Commission, the sector has faced a 23% increase in the National Minimum Wage over the past three years, compared with inflation of 9% over the same period.
The NHBF argues that employers need greater support to manage the gap between rising employment costs and inflation, helping businesses remain viable and creating opportunities for future growth.
While potential business rates relief would be welcome, the NHBF survey also identified other government measures that employers believe would make a significant difference to their businesses.
A reduced rate of VAT was the most frequently cited measure, with 82.6% of respondents identifying it as one of the changes that would most benefit their business.
The federation points to the labour-intensive nature of hair and beauty services as a key reason why VAT presents a particular challenge for the sector.
Unlike businesses with substantial expenditure on goods and materials, salons cannot reclaim VAT on wages, despite employment costs representing one of their largest overheads.
The NHBF believes a reduced VAT rate could help ease this pressure and provide businesses with greater financial flexibility.
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Alongside VAT reform, survey respondents highlighted several other measures that could help businesses manage costs and support recruitment.
Slower increases to the National Minimum Wage were identified by 44.1% of respondents as a priority. A further 33.7% called for employer National Insurance relief for small businesses, while 33.1% identified incentives for hiring trainees and apprentices as a measure that would benefit their business.
The findings underline the range of financial pressures facing salon owners, from wage increases and employer contributions to the cost of bringing new talent into the industry.
Although the reported business rates changes could provide some relief for eligible businesses, the NHBF’s findings suggest that employers are looking for broader measures to improve financial sustainability.
With staffing levels under pressure and employment costs continuing to rise, the sector will be watching the Budget closely for confirmation of the proposed changes and any further support for small businesses.
For more information about the NHBF and its work representing the hair and beauty industry, visit the NHBF website.
Follow the federation on Instagram at @nhbfsocial.
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