Budget 2018: how the changes will impact your beauty business
A commitment to reduce business rates and apprenticeship costs were among the key points addressed in Chancellor of the Exchequer Phillip Hammond’s 2018 budget.
In his speech yesterday (October 29), the Chancellor announced how the Government’s plan for tax and spending will change from 2019 – his last budget before Brexit, stating that it’s been created for “the strivers, the grafters and the carers”.
Here’s how the 2018 budget will affect your beauty business…
Business rate changes
Business rates for small businesses with a rateable value of £51,000 or less will be cut by a third for two years in a bid to help the high street survive the uncertainty of a looming Brexit.
However, despite the extra relief being praised by smaller beauty businesses, it leaves larger salon chains on the high street with the burden of business rates.
The Chancellor has also announced a new Digital Service Tax which will apply to online platforms such as Amazon and Facebook, which “may signal that the Government is taking small steps towards addressing this imbalance,” said Hilary Hall, chief executive of hair and beauty membership bodies National Hairdressers’ Federation (NHF) and National Beauty Federation (NBF).
Frank Woods, retail sector specialist at insurance company NFU Mutual, added: “The Government’s commitment to reduce business rates for the smallest retailers in the UK is welcome, but is not going to satisfy those calling for a more fundamental reform of business rates across the country.”
To further help bricks and mortar businesses, £675 million has been allocated for local high streets to improve transport links, redevelop empty shops as homes and offices, and to restore or re-use old and historic properties.
“Taking steps to invest in transformation of city centres supports the widely recognised need for change. Making it easier for properties to be developed as homes to encourage more people to live in central urban areas will also help to build communities in areas where boarded up shops now dominate,” said Woods.
Apprenticeship cost changes
The mandatory cash contributions from employers towards the cost of apprenticeship training and assessment is set to be reduced from 10% to 5%, taking affect from April 2019 for new starters.
Employers of apprenticeships on the beauty professional (beauty therapy) Trailblazer standardswill also see cash contributions go down from £700 to £350. So, if you’re thinking of taking on an older apprentice (19 years old plus), waiting until April 2019 will save you at least £350 per apprentice.
Salons with less than 50 employees who take on 16 to 18 year olds, or 19 to 24 year olds who have been in care or who have a local authority care plan, will continue to pay nothing towards the cost of apprenticeships.
VAT registration threshold changes
The vat registration threshold is being maintained at its current level of £85,000 for two more years until April 2022, the Chancellor announced, despite speculation that it may be slashed to £43,000.
Hall commented: “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.”
National Living Wage and National Minimum Wage changes
The National Living Wage is set to increase 4.9% from April 2019, rising from £7.83 to £8.21 an hour. But what does this mean for beauty businesses?
Hall said: “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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