The budget 2014 - not much there for small salon businesses

Small businesses appear to have been somewhat overlooked by the Budget 2014, with most reform targeted at medium to large enterprises. Commenting on the Chancellor's Budget statement, National Hairdressers’ Federation president Paul Curry said: “Overall, today’s Budget will have less effect on hairdressing salons than the work the government is already doing in other, more core areas, such as reforming apprenticeships and business rates, revitalising the high street and looking at ways to improve car parking and traffic flow in town centres. “But there were, nevertheless, a number of potentially positive announcements, including the expansion of the Annual Investment Allowance, the extension of business rates discounts within enterprise zones and the simplifying of national insurance contributions for self-employed workers. “Raising the income tax threshold to lift more low paid workers out of paying tax altogether is also likely to be beneficial to a labour-intensive, relatively low wage industry such as hairdressing. But it will need to be set against the negative effect on employment in our sector that we are expecting from this autumn’s rise in the national minimum wage. “The extension in funding of the Apprenticeship Grant for Employers scheme is also welcome. Hairdressing, barbering and beauty employers, including NHF members, are in the second wave of the government’s ‘trailblazers’ helping to reform apprenticeships – anything that encourages small businesses to invest in apprentices, as this grant does, is positive.” Ian Egerton, managing director at The Stress Exchange salon in London and director at ICO management services said of the Budget: "On the surface the Budget didn’t seem do a lot for small business. – it seemed mainly to benefit exporters and international trade. The devil may be in the detail as it unfolds, but at this time I only see a reduction in business rates as a benefit to micro businesses. "As a feel good factor the growth forecast of 2.7% should mean the service sector generally will benefit. The increase on personal tax allowance to £10,000 this new tax year and a further £500 in 2015/16 will help our relatively low paid industry." Phil Orford, chief executive of the Forum of Private Business, said: "Overall this was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones. "However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a £3bn export support budget." For many salon owners, the most positive news came in October’s Autumn Statement when the Chancellor announced the abolition of employer national insurance contributions for under 21s. Commenting on this Hellen Ward said: “Yesterdays budget really wasn’t directed at the small to medium sized business owner; there wasn’t much to please our sector and  I feel it was a budget for the electorate instead.  I’m far more excited about the Chancellor’s Autumn Statement from 2013, where he stated that Employers’ national insurance contributions will be abolished altogether for employees under the age of 21 in 2015, together with the news that funding for apprenticeships will be made more accessible and available directly from HMRC. “ Continued Hellen: “Our sector still heavily relies on the delivery of apprenticeships, and all too often salon owners are left managing this expense with little or no support. We shouldn't forget that only 40 or 50 years ago young people (or their parents) often paid the company concerned to undertake their apprenticeships, and since then so much has changed with the onus and expense firmly left with the salon owner. “To be given some help in the form of an NI break, and even better, direct help with apprenticeship funding is great news for our industry and really is an important and vital move that will directly benefit our sector. The government plans to reform apprenticeship funding to allow employers to receive assistance with the training costs of apprentices directly through an HMRC-led system, and invest in higher apprenticeships by providing £40 million towards an additional 20,000 higher-apprenticeship schemes to commence over the next two academic years. This is very welcome news, and as co-chairperson of The Trailblazers committee for our sector which aims to ensure that the content of the apprenticeship is employer led, this positive news could be extremely beneficial for an industry like ours which is labour intensive, skills based and training driven – given salon owners the financial support they need to continue investing in the future of British Hairdressing”. Said Michael Van Clarke, owner of an eponymous, multi-award winning salon in London’s Marylebone: “Taking under 21s out of NIC is a good thing as is raising the personal tax free allowance to £10,500. But keeping the NIC threshold at £7,956 per year means they are still taking two big bites of tax, (13.8% employer) and 12% (employee) from earnings over £153 per week. “The tinkering has done nothing to address the biggest tax facing a small service business - 20% VAT, and with little to recover. The recent one off £2000 hand back of NIC is nothing compared to more than the extra £2000 PER WEEK they are extracting from our business since VAT went from 15% to 20% 3 years ago. That's the biggest job killer.”