Budget tax rise puts two in five UK hair salons at risk of closure, warn industry leaders

The UK hair salon industry faces an uncertain future, with two in five salons at risk of closure due to rising employment costs outlined in last month’s budget.

Industry leaders, including Carla Whelan, CEO of the Regis and Supercuts salon group, have voiced concerns over the “devastating” impact of increased employer national insurance contributions, which could push many longstanding salons into unsustainable losses.

The budget’s tax measures, which include a 1.2 percentage point increase in employer national insurance contributions to 15% and a reduction in the earnings threshold for employers from £9,100 to £5,000, are expected to raise £25 billion. However, the British Hair Consortium survey revealed that 40% of salon owners are now contemplating closure in the next year, with most citing unaffordable employment costs.

“The cost of employment has created an impossible profit and loss scenario for individual hair salons, where labour accounts for about 50% of costs,” said Whelan. Toby Dicker, owner of five salons, noted that these changes would cost his business an additional £122,000, pushing some salon owners toward a self-employed model as a last-ditch effort to cut expenses.

Andrew Collinge, chairman of Collinge & Co and a fourth-generation hairdresser, has written to Business Secretary Jonathan Reynolds to outline the impact of these changes. “We believe in contributing through paying taxes, but this budget appears to unfairly target employment,” he stated, echoing a sentiment felt across the industry.

Beyond hair salons, other sectors are facing similar challenges. Supermarkets like Tesco and Sainsbury’s have warned that they may raise prices to offset tax burdens, while the Night Time Industries Association reported that four in ten late-night venues are at risk of closing. UK Hospitality, representing the hospitality sector, warned that these measures could lead to widespread closures and job losses, particularly for small businesses.

Company insolvencies have already surged, with 1,022 UK businesses filing to shut down in the week ending November 8—a 64% increase from the previous year. As more industries grapple with the rising cost of employment, calls for government intervention are growing louder, with many urging the Chancellor to reconsider policies that could impact Britain’s small businesses and employment rates.

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Budget tax rise puts two in five UK hair salons at risk of closure, warn industry leaders