[UPDATED] Financial Support for Hair Salons and Barbers During the Coronavirus
The Government pledged to provide more support to UK businesses in light of the coronavirus and following the 2020 Budget. A cash injection of £350bn has been promised to support businesses, but what financial support is available for hairdressers and barbers?
Furlough job retention and financial support scheme extended to October 2020
On Tuesday 12 May the chancellor Rishi Sunak announced the job retention furlough scheme will be extended for four months (until the end of October 2020). Until the end of July there will be no changes to the scheme outlined below.
He said: “From August to October the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work. Employers currently using the scheme will be able to bring furloughed employees back part-time.”
The UK Government will start asking employers to start sharing with the government the costs of paying people’s salaries with more details being announced at the end of May 2020.
He added: “Workers will, through the combined efforts of government and employers, continue to receive the same level of support as they do now, at 80% of their salary, up to £2,500.”
Bounce back loans up to a maximum £50,000 available for small businesses from 1 May
The chancellor announced on 27 April that businesses can apply for Bounce Back Loans up to a maximum of £50,000, or 25% of turnover, with the government paying the interest for the first 12 months.
He said the loans which are available from 1 May have no forward-looking tests of business viability or complex eligibility criteria.
He pointed out: “I have decided, for this specific scheme, that the government will support lending by guaranteeing 100% of the loan… And the £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses.”
What financial support is available to hairdressers during the coronavirus?
On 20 March 2020 the chancellor announced he will be helping to pay people’s wages which will be applied in a number of different ways:
- The government grants will cover 80% of the salary of retained workers, up to a total of £2,500 a month – that’s above the UK median earnings level.
- The scheme, which is open to any employer in the country will cover the cost of wages backdated to 1 March and will be open before the end of April for at least three months.
- The Coronavirus Business Interruption Loan Scheme will now be interest-free for 12 months (previously announced as being interest-free for six months). The loans will be available from Monday 23 March.
- The next quarter of VAT payments will be deferred to the next quarter and no business will pay VAT from now to mid June. This means businesses will have until the end of the financial year to repay those bills, which will be a £30 billion injection to businesses equivalent to 1.5% GDP.
- The Universal Credit standard allowance will be increased by £1,000 for the next 12 months.
- The Working Tax Credit basic element will also be increased by £1,000 for the next 12 months.
- Self-employed people can now access Universal Credit in full at a rate equivalent to Statutory Sick Pay for employees.
- The next Self-Employed self-assessment payments will be deferred until January 2021.
- Renters will receive nearly £1 billion of support by increasing the generosity of housing benefit and Universal Credit so the Local Housing Allowance will cover at least 30% of market rents in your area.
Following on from the 2020 Budget the government announced on 18 March it has extended the financial support available to hair salons and barbers:
- No business rates for salons of any size, not just those with a rateable value below £51,000.
- A Bill is going through Parliament on 18 March to ensure Statutory Sick Pay (SSP) is paid from day one rather than day four – backdated to take effect from 13 March 13 2020.
- Businesses with a rateable value of less than £51,000 can access an additional cash grant of up to £25,000.
- Businesses that don’t pay business rates (because they benefit from small business rates relief) will see the £3,000 cash grant announced in last week’s Budget extended to £10,000.
- Three-month mortgage holidays for those in financial difficulty due to coronavirus.
- Private renters will be protected with new legislation that will protect them from eviction.
- Business loans on “attractive terms”, including a business interruption loan scheme which will provide loans of up to £5m, interest-free for six months, starting as soon as next week.
“The Government has promised some welcome relief for businesses which will struggle to survive under the latest measures to control the spread of coronavirus,” said Ian Egerton, National Hair and Beauty Federation (NHBF) president.
“But speed is of the essence – this additional support needs to be made available right now when hair and beauty salons need the support most. If clients stop coming into salons, hair and beauty businesses can’t continue paying employees or paying their bills.”
Hilary Hall, NHBF chief executive added: “Wages are by far the biggest cost for salons. Our phones have been ringing off the hook with calls from worried salon owners asking for advice on laying off staff or making redundancies.
“If the current crisis continues for any length of time, we will need more Government support, including rent holidays, suspension of tax payments such as PAYE, VAT or corporation tax and delaying planned increases to the National Living Wage/National Minimum Wage.”
What other help and resources are available for hairdressers during the coronavirus?
Make sure you read how the hairdressing industry is dealing with the coronavirus for advice on what other salon owners are doing during the pandemic.
“Rescue the hair and beauty salons UK” petition
Among the biggest of these efforts is a widely circulated petition, “Rescue the hair and beauty salons UK”, which has already reached 47,000 signatures and counting, as of 18 March.
A number of requests are made in the petition, including a rescue plan package of £2bn to allow banks to release funding immediately, having coronavirus fall under appropriate insurance coverage such as “business interruption” or “civil unrest”, and ensuring landlords cannot claim any breach of non-payment during this time.
A greater amount of time to pay outstanding HMRC debt and emergency funding to cover statutory sick pay has also been proposed.
Five ways your clients can help you during the coronavirus:
Salon software specialist Phorest has shared a handful of different ways you can ask loyal customers to support you at this time:
- Have clients understand that if they feel healthy, are following the regulations set forth by the World Health Organisation (WHO), and follow the health guidance outlined in your salon, such as frequently washing hands, then they are absolutely fine to attend their next appointment.
- Get valued customers to make positive reviews online about the quality and hygiene of your salon.
- Make sure clients who enjoyed their experience take photos of the finished results, upload them to Instagram and tag the salon’s page.
- Ask followers of your social media accounts to keep engaging with your content and tell them about your hashtags.
- Have regular clients pre-book their usual appointments to a later date to ensure the salon’s diary stays full, which will keep team morale high.