“We no longer have the capacity to invest in the industry’s future due to the new tax regulations,” states Kerry Larcher, owner of a hair salon in East London.
She is among numerous salon proprietors expressing their inability to hire apprentices after the 2024 Budget announcement.
“The government’s choices made in October will cost me over £1,000 weekly,” Ms. Larcher mentioned.
“I employ 36 individuals, 12 of whom are apprentices. Typically, we bring on about four to five apprentices each year. This time, we are contemplating not hiring any.”
The British Hair Consortium, representing 50,000 hairdressing professionals across the UK, is urging the government to reduce the VAT on labor costs for salons to 10%.
Although salons are subject to the standard 20% VAT like other businesses, the British Hair Consortium contends that the labor-intensive nature of their services limits their ability to recover these expenses.
As a result, many salons are increasingly choosing to rent chair space rather than hire full-time stylists to sidestep the tax burden.
Research by CBI Economics indicates that this trend could adversely impact apprenticeship opportunities.
A spokesperson for HM Treasury remarked that they are working to create a “level playing field” for high street enterprises, including hair salons, by permanently reducing business rates.
Ms. Larcher operates The Vanilla Room in Hornchurch with a model that employs staff directly.
She argues that the differing tax treatments of various business models lead to an unfair competitive environment.
“We’re not against fulfilling our tax obligations,” she clarified.
“What we seek is equitable treatment and appropriate regulation.
“This would enable us to invest more in apprenticeships in the long run.
“The main challenge facing my business model is how to bring on apprentices amid rising costs.”
A study from CBI Economics revealed that the labor-intensive characteristic of hair salons makes them disproportionately affected by taxes compared to other high street businesses.
It projected that by 2027, there may be no new apprenticeships available, with direct employment potentially plummeting by 93% by 2030 due to escalating costs.
Toby Dicker, co-founder of the British Hair Consortium, stated, “A uniform tax approach fails to accommodate our needs and has resulted in an uneven playing field.
“An increasing number of salon owners are either shutting down their businesses or altering their hiring practices by opting to rent chairs to independent contractors simply to stay afloat.”
Mr. Dicker emphasized that reducing VAT to 10% could “preserve salons nationwide.”
A Treasury representative announced plans to eliminate the £110,000 cap on business rates relief for over 280,000 properties in the retail, hospitality, and leisure sectors.
The post Salon Owners Urge Government to Cut VAT as Rising Costs Threaten Apprenticeship Opportunities first appeared on London.
Author : London News
Publish date : 2025-02-23 11:40:00
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