The Autumn Budget And The Implications For The Industry

The UK Autumn budget was announced by the new Chancellor Rachel Reeves on Wednesday 30 October and among the changes were several decisions which will affect Professional Hair salons. The main changes that will affect the industry are ;

A Simplification and Digitalisation of Taxes

This measure reduces the administration and red tape and emphasises tax simplification and increased digitalisation.

An Increase In The Minimum Wage

The minimum wage is set to rise to £12.21 per hour from April 2025 for workers over the age of 21.

National Insurance

There will be no increase in NI for employees. The conditions however for employers are more complicated. Employer's NI contributions will rise to 15% from 13.8% and the threshold for paying NI on their employee's earnings will be fall from £9,100 to £5,000. To help counter some of the extra cost the Employment Allowance will go up from £5,000 to £10,500.

What are the implications ?

The simplification and digitalisation of taxes should be good for all as the process will become easier and less time consuming which could especially benefit barbers and small salons.

In contrast the minimum wage increase will obviously increase the expenses involved in the payment of employees and stylists and will inevitably lead to higher operating costs for salons.

The National Insurance changes will affect salons differently depending on their size/number of employees but the general feeling within the industry is that the extra costs will negatively impact salons and push many stylists into mobile self employment. There is also a feeling that more salons will adopt the rent a chair model. It's also accepted the rise in the minimum wage will negatively impact the employment of new stylist, and in particular, affect apprenticeships. This, combined with the current drop in the number of apprenticeships, could lead to a skills gap which could take decades to resolve.

Conclusion

It's a mixed bag for those in the industry. For those stylists who are employed on the minimum wage the budget is obviously a good thing but for salon owners it's way more complicated and anything that creates more uncertainty and doubt can't be viewed as a positive thing given the existing problems that the industry faces.