First published on Monday, October 26, 2026
Last updated on Monday, October 26, 2026
As the UK population prepares for the 2026 Autumn Budget, small business owners across the country are bracing themselves for the potential impact on their operating costs.
For hair and beauty businesses, concerns are mounting as rising costs and employment challenges continue to place pressure on businesses already facing financial uncertainty.
These concerns have prompted more than 2,000 salon owners to sign an open letter, backed by the British Hair Consortium (BHC), calling on Chancellor John Healey to reduce VAT on hair and beauty services from 20% to 10% in this week's Budget (28th October).
Rising employment costs put salon businesses under strain
The UK's hair and beauty industry has faced a range of challenges in recent years, with financial pressures contributing to concerns about salon closures across British high streets.
Once a staple of towns and villages, traditional salons are now facing growing challenges in maintaining financially sustainable businesses.
At the same time, the industry has seen a shift towards self-employment, with more hairdressers and beauty professionals choosing to work independently, whether offering mobile services, operating from home or renting chairs within established salons.
For salon owners who employ staff, rising wages, pension contributions and employer National Insurance costs are adding further pressure, raising questions about the long-term sustainability of traditional employment models.
The economic importance of the UK's hair and beauty industry
According to the Value of Beauty Report 2025, the beauty sector contributes £28.4 billion to the UK economy and supports approximately 612,000 jobs across the beauty and personal care industry.
Recognising the pressures facing small businesses, the Government announced a package of reforms on 23 October aimed at reducing administrative burdens. These include pausing plans to introduce additional Profit and Loss filing requirements for small businesses at Companies House in April 2028 and extending import tariff suspensions on more than 250 goods, including chemicals, ingredients and packaging, until December 2028.
The announcement has been welcomed by the British Beauty Council, with CEO Millie Kendall OBE describing the measures as providing much-needed breathing space for businesses facing challenging trading conditions.
However, the Council has also called for further action in the upcoming Autumn Budget, particularly around employment costs and business rates, which continue to place financial pressure on salon owners.
While these reforms represent a positive step for the industry, attention now turns to whether the Autumn Budget will introduce further measures to address the rising costs of running a hair and beauty business.
What should hair and beauty employers look out for in the Autumn Budget?
As the budget looms closer, salon owners will be closely monitoring announcements that could affect their operating costs and employment responsibilities.
One of the industry's biggest priorities is a potential reduction in VAT on hair and beauty services from the current 20% to 10%. Industry representatives argue that reducing the rate could ease financial pressures on salons, allowing businesses to invest more in their workforce, recruit new employees, and provide greater apprenticeship opportunities for the new generation.
However, VAT is not the only concern for salon owners.
Employment costs will also be a key consideration, particularly following previous increases to employer National Insurance contributions and the National Minimum Wage. Any further changes to employment-related costs or available reliefs could influence how salons approach recruitment, staffing and workforce planning.
Business rates are another area to watch, with potential changes to Small Business Rates Relief offering some financial support to eligible salons operating from high-street premises.
How can salon owners manage employment challenges?
While the Autumn Budget may provide some clarity for the hair and beauty industry, salon owners can take practical steps now to manage rising costs and employment challenges.
Review staffing costs and workforce planning
Regularly reviewing staffing budgets, working hours and appointment demand can help salon owners manage employment costs while maintaining service quality.
Update employment contracts and working arrangements
With more professionals exploring self-employment and chair-rental arrangements, salon owners should ensure employment contracts reflect actual working relationships to reduce the risk of employment status disputes.
Prioritise employee retention
Recruiting and training staff can be costly. Offering development opportunities, recognising employee contributions and maintaining open communication can help reduce staff turnover rates.
Stay informed about employment law changes
Keeping up to date with changes to minimum wage requirements, statutory entitlements and employment legislation can help salon owners prepare additional responsibilities and costs.
Seek professional HR advice
Access to expert HR support can help salon owners navigate employment challenges, understand their legal obligations and make informed workforce decisions.
Supporting the beauty industry to cut through the red tape
At BrightHR the team is on hand to support beauty salon owners dealing with the complexities of HR and health and safety. With expert advice and support alongside digital tools, beauty salons can support compliance whilst keeping costs down.
Talk to a member of the BrightHR team today to discover how HR software and employment law services can support your business.
