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What the Autumn Budget 2018 Means for the Hairdressing Industry

by charlottegw / October 30, 2018

autumn budget hairdressing industry

The Autumn budget contained some good news for the hairdressing industry on apprenticeship costs, business rates and VAT but also announced inflation-busting increases to the National Living Wage/National Minimum Wage.

This was the final budget presented by Philip Hammond before the UK leaves the European Union. Below are the four areas that are most relevant to the hairdressing industry…

Apprenticeship costs
The mandatory cash contributions from employers towards the cost of apprenticeship training and assessment will be reduced from 10% to 5%, taking effect from April 2019 for new starters.

Industry comment:
Alan Woods, CEO of VTCT says: “Small and medium sized businesses are a major source of employment for apprentices and trainees across the UK, especially in the hairdressing, beauty, and barbering sectors. The Government’s commitment to reduce non-levy paying SMEs contribution to apprenticeships training from 10% to 5%, as part of a £695m package to support apprenticeships, is a practical and positive step and will have a massive impact on hundreds of businesses across the UK as they look to take on more apprentices.”

VAT registration threshold
The Chancellor announced that VAT registration threshold would be maintained at the current level of £85,000 for two more years until April 2022. There had been speculation that he would slash the VAT registration threshold to £43,000, so this was good news.

Industry comment:
Hilary Hall, National Hairdressers Federation chief executive says: “We responded to the government’s consultation on the VAT registration threshold, calling for a smoothing of the ‘cliff edge’ which currently lands salons with an immediate bill of £17,000 as soon as they go £1 over the threshold.  The Chancellor has not ruled this out, but as VAT is a tax controlled by the European Union, he will wait until the terms of Brexit are clear.  There are clear signals though that the longer term plan for VAT is to reduce the threshold after 2022.”

Business rates
Business rates for hair salons, beauty salons and barbershops with a rateable value of £51,000 or less will be cut by a third for two years.  In a further move to help the high street, £675m has been allocated for local high streets to improve transport links, re-develop empty shops as home and offices and to restore or re-use old and historic properties.

Industry comment:
Alan Woods, CEO of VTCT says: “Additionally, the Chancellor’s pledge to cut business rates for small business by a third for two years from April 2019 will enable greater flexibility to expand their workforces, and train up more apprentices.”

Wage rises
However, the Chancellor also announced inflation-busting increases for the National Living Wage and the National Minimum Wage as displayed in the table below.

  Current rate April 2019 Increase
National Living Wage £7.83 £8.21 4.9%
21-24 7.38 7.70 4.3%
18-20 £5.90 £6.15 4.2%
16-17 £4.20 £4.35 3.6%
Apprentice rate* £3.70 £3.90 5.4%
Accommodation offset £7.00 per day £7.55 per day 7.9%

Industry comment:
Hilary says: “We have been warning hair and beauty salons to expect higher than inflation increases, especially to the apprenticeship rate.  The government has set a target of £9 per hour by 2020 for the National Living Wage, so salons should plan now for a further large increase next year.”

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