A significant change among British hairdressers to register as independent workers is to create the greatest threat to the industry that Darren Messias has seen in his career of more than three decades.
The stylist and managing director of a hair franchise in East Midlands says that his business is being undermined by “rental rental” that allow hairdressers to use their space and some equipment, but remain independent for fiscal purposes. As they are not employed by the living room, companies pay less VAT and national employer insurance.
“You have two rooms next to each other, with the same number of people, the same products and services,” says Messias. “One is a model used as us, so we are paying VAT, the contributions of the National Insurance.
“Next to it is ‘Useful employment’ or ‘Rent-A Schir’. The business owner has found a way of not paying VAT and that does not feel like a leveling playing field, they can massively undermine the price, and that makes businesses exceptionally difficult for us.”
The increase in labor costs, including increases in the national minimum wage and the employer or, are creating a particular compression for hall owners. The classrooms are affected three times more difficult by labor taxes and VAT than a retail business of the street equivalent, according to research by the British hair consortium, which represents the industry and the CBI economy. This is because they are so laborious (approximately 60 percent of the costs are wages, and cannot claim sales taxes in the way they can retail or hospitality.
As a result, many hairdressers are leaving the profession, or making their staff work on their own to reduce their tax bill. This is creating “distorted competition between registered and unregistered VAT companies,” according to the BHC and CBI economy.
His report estimated that discrepancies, together with the decrease in employment, have reduced VAT receipts by £ 2.4 billion since 2009. He warned that employment in the hairdressing industry could fall to 93 percent by 2030, potentially creating a sector devoid of the rights that come with being an employee.
Like Messias, Donna Finn, who began as an apprentice in 1974 and now has the hair and beauty hall of the ego of Fe’Male in Hull, it is more difficult to overcome every month, as the costs increase and the rivals opt for the independent model.
“Some of them are done in a way of low control,” says Finn, who has six employees and an apprentice. “I feel that my teeth have kick me because I am legal.”
Salons owners also warn that learning will be more difficult to offer and eventually they could become obsolete as the cost of training becomes unsustainable for many. “If you work on your own, you will not share your salary to teach hairdressing,” adds Finn.
Messias, whose hair franchises of 20 kh acquired about 50 apprentices one year before the pandemic, last year recruited only 21. Although he receives some government funds for training, he predicts that the numbers will continue to decrease since the owners of the rooms can no longer pay the additional costs, despite the fact that a strong interest of a young cohort that wishes to take the profession.
The BHC argues that self -employment is a “perfectly legitimate work state.”
But the industry wants reforms, including a divided rate VAT model, through which laboratory -based services are taxed 10 percent, compared to the current 20 percent, to recognize its cost structure. It has also suggested to reduce the level of income in which a business begins to pay VAT, currently £ 90,000, as a way of combating disguised employment.
“Without some kind of leveling of the playing field, you will see a complete sixteenth of employment,” warns Toby Dicker, co -founder of the BHC.
Last year, 63 percent of hall workers worked on their own and this is expected to increase 76 percent by 2030, according to the BHC report. Employment in the sector has decreased to 69,400 workers in a decade.
For some hairdressers, the changes in the employers introduced in the October budget were the final tail.
Katya Mavic-Davies, managing director of Myla and Davis, who has four rooms in southern London, says: “Hairdressers cannot cope with the most recent changes due to the [high] Labor costs. “
This month, Myla and Davis decided to close what was supposed to be an academy space. “I think the budget really ended that. I have to say that this is the first time in 15 years that we have reduced, “says Milavic-Davies.
“There is such a strong and internationally generalized precedent for VAT to be less for service industries. . . It simply seems to me that this is not something that the government is prepared to participate. “
A treasure spokesman replies: “We are leveling the field for the street companies, including hairdressers, permanently reducing commercial rates and eliminating £ 110,000 [business rate relief] CAPE for more than 280,000 retail, hospitality and leisure commercial properties, while limiting the corporations tax during the duration of Parliament. “