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Accountants for hairdressers, barbers and salons
Where chair rental and employment status is the question that really matters.
Chair rental is the question that decides everything else
Most salons run some version of it: the stylist keeps their own takings and pays you a weekly rent or a percentage. Done properly it is a genuine arrangement between two businesses. Done loosely it is employment with a different name on it - and if HMRC takes that view, the salon owes the PAYE and National Insurance that should have been deducted, plus interest and penalties, going back years. It is the largest single risk in this trade.
What matters is how the arrangement actually works, not what the agreement is called:
- Does the stylist set their own prices, hours and holidays, or does the salon?
- Do they take their own bookings and keep their own client list?
- Do they buy their own products and equipment?
- Do they carry any real financial risk - could they have a bad week and earn nothing?
- Could they send someone else in their place?
- Are they free to work at another salon?
The more of those that point to the salon, the weaker the self-employed position. We will look at how yours actually runs and tell you plainly where it sits, before it becomes an enquiry rather than a conversation.
Services, products and the VAT threshold
Salon services are standard rated, and so are the shampoos and styling products you sell over the counter. There is no zero-rated corner of this trade to soften the threshold, so a busy salon reaches registration faster than owners expect - and it is tested on a rolling twelve months, not your accounting year.
How you treat chair rental matters here too. If the stylists are genuinely self-employed, their takings are theirs and only your rental income is yours, which keeps the salon well below the threshold. If the arrangement does not hold up, all of it is the salon’s turnover, and the VAT question arrives at the same time as the PAYE one.
Cash, cards and keeping it straight
This is a trade that still takes real cash, and it is one HMRC looks at. None of that is a problem with a sensible record: a daily takings figure split between cash and card, the card machine statements, and the bankings. What causes trouble is a shoebox with no daily record at all, because then the figure becomes an argument rather than a fact.
Also worth claiming
- Salon fit-out, chairs, basins, dryers and mirrors - capital allowances rather than a straight expense.
- Stock of colour and product held at the year end.
- Uniforms, laundry, training and professional insurance.
- Tips - how they are shared decides the National Insurance treatment.
- Mobile stylists: travel between clients, and the kit you carry.
Decide employed or self-employed deliberately, write it down, and run it that way from day one. Reclassifying afterwards is expensive; setting it up correctly costs an hour of conversation.
Common questions
Hairdressers, barbers and salons - the questions we get asked
Are my chair renters self-employed?
It depends on how the arrangement really works - who sets prices and hours, who takes the bookings, who buys the products, and whether they carry genuine financial risk. The label on the agreement does not decide it. We will look at yours and give you a straight answer.
What happens if HMRC disagrees about employment status?
The salon becomes liable for the PAYE and National Insurance that should have been deducted, plus interest and penalties, potentially over several years. That is why it is worth reviewing before anyone asks rather than after.
Do I charge VAT on retail products as well as services?
Yes - both are standard rated. There is no lower rate on salon services or on the products you sell, so nothing softens the run up to the registration threshold.