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 closing due to rising staffing costs outlined in last month’s Budget.

Industry leaders, including Carla Whelan, chief executive of Regis and Supercuts salon groups, have expressed concerns about the “devastating” impact of increased employer National Insurance contributions, which could push many legacy salons into unaffordable losses.

The Budget’s tax measures, which include a 1.2 percentage point rise in employers’ National Insurance contributions to 15% and a reduction in the income limit for employers from £9,100 to £5,000, are expected to raise £25 billion. However, a British Hair Federation survey revealed that 40% of salon owners are now considering closing their salons in the next year, with most citing unaffordable staffing costs.

“The cost of labor has created an impossible profit-and-loss scenario for individual hair salons, with labor accounting for about 50% of costs,” Whelan said. Toby Decker, owner of five salons, said the changes would cost his company an additional £122,000, pushing some salon owners towards a self-employed model as a last ditch effort to cut costs.

Andrew Collinge, chairman of Collinge & Co and a fourth-generation hairdresser, has written to Business Secretary Jonathan Reynolds to explain the impact of the changes. “We believe in contributing by paying taxes, but this budget seems to unfairly target hiring,” he said, echoing sentiments across the industry.

Other than hair salons, other sectors face similar challenges. Supermarkets such as Tesco and Sainsbury’s have warned they may raise prices to offset tax burdens, while the Night-Time Industries Association said four in ten late-night venues were at risk of closing. UK Hospitality, which represents the hospitality sector, warned that these measures could lead to widespread closures and job losses, especially for small businesses.

Corporate insolvencies have actually risen, with 1,022 UK companies applying to close their doors in the week ending 8 November – an increase of 64% on the previous year. As more industries grapple with the rising cost of employment, calls for government intervention are growing, with many urging the Chancellor to reconsider policies that could affect small businesses and employment rates in Britain.