Spring statement 2022: what does it mean for hair salons and hairdressers?

Chancellor Rishi Sunak has made his annual Spring Statement speech, where he set out the Government's tax plan to support the UK economy, businesses and families – but how might it affect hairdressers and salons? Sunak announced a package of measures he claimed will help businesses weather the storm of increased National Insurance payments and rising energy prices due to the war in Ukraine.

How the Spring Statement 2022 Will Affect Hairdressers

National Insurance

The national insurance threshold will be lifted by £3,000 to £12,570 for both employed and self-employed workers, something that could have a positive impact on an industry that has traditionally been a mix of employed and self-employed. From July 2022, people can earn £12,570 per year without paying a single penny of income tax or NI. Billed by Sunak as the “largest single personal tax cut in a decade”, the change raises the National Insurance Contributions threshold in line with the point at which people start paying income tax. Sunak said the measure, which comes into effect in July, will give 30 million people £330 each.

Fuel Duty

If you do a lot of driving for work, the soaring cost of energy is likely to have been affecting your bottom line for a while.

Sunak announced a 5p a litre cut in fuel duty, which came into effect at 6pm on 23 March 2022 and will last until March 2023.

Motoring group RAC has predicted that this measure will take £3.30 off the cost of filling a typical 55-litre family car. However, benefitting from the fuel duty cut will depend on retailers reducing their prices.

Business Rates

The previously announced business rates discount scheme for retail, hospitality and leisure is starting on 1 April, which is a 50% relief on rates but with a cap of £110,000 per company (the current 66% discount ends on 31 March).

Business rates will be reevaluated in 2023, based on rental values of 2021, which should see bills coming down for many in struggling sectors.

Employment Allowance Increase

Sunak announced that the Employment Allowance will increase to £5,000 in April 2022. This is the amount you can claim against your employers’ Class 1 National Insurance. As part of the Chancellor’s new tax plan, the government is also looking at more flexible models for apprenticeship training, as well as how to encourage greater private sector investment in employee training. Sunak claims it is a tax cut worth up to £1,000 for half a million small businesses.

Improving R&D tax credits for small businesses

The Chancellor has committed to improving R&D tax credits to “deliver better value for money for the taxpayer while being more generous”. Details will be announced later in the year. The Federation of Small Businesses (FSB) had previously called for the system to be simplified.

Energy-saving plans

The Government is scrapping the VAT if home owners want to install energy insulating materials. For the next five years, homeowners having materials like solar panels or heat pumps installed will pay 0% VAT (it used to be 5%). Sunak said he can make the move as a result of Brexit – “We will abolish all the red tape imposed on us by the EU.” On the subject of rising energy costs, leading organisations such as the NHBF are calling for an energy bill rebate, similar to that offered to domestic properties, to be made available to commercial properties.