Plaid Cymru MP urges Chancellor to halve VAT to protect beauty salons

Nation.Cymru staff

The Chancellor has been urged to halve VAT on hair and beauty services amid warnings that tax pressures are costing jobs and reducing apprenticeships.

Ynys Môn MP Llinos Medi has written to John Healey ahead of the autumn Budget, asking him to consider a 10% rate for labour-intensive salon services following concerns raised by business owners and workers in her constituency.

The proposal is backed by the British Hair Consortium, which argues that the current system disproportionately affects businesses where wages account for most operating costs.

The standard VAT rate is 20%, with businesses generally required to register once their taxable turnover exceeds £90,000 over a rolling 12-month period. The threshold applies to turnover rather than profit.

Campaigners argue that the cost of crossing that threshold can discourage expansion, while rising employment costs make it harder for salons to retain staff and train new recruits.

In her letter, dated September 23, Ms Medi highlighted concerns about the number of employers able to offer apprenticeships.

“I am particularly concerned to hear from businesses in my constituency that the cost of VAT is having an impact on the number of apprenticeships available for young people, as there is an increasing shortage of employers who can afford to employ and train them,” she wrote.

She described salons as a traditional route into employment for young people and asked what consideration the Chancellor had given to the consortium’s proposed reduction.

The letter also cited the industry body’s warning that rising labour costs and the VAT threshold were accelerating disguised self-employment, with consequences for secure jobs and tax revenues.

Ms Medi said: “Local salons tell me that the current system increasingly pushes businesses towards self-employed models simply to remain viable. While genuine self-employment has an important place in the economy, we should be concerned when tax pressures encourage businesses away from direct employment.”

Her intervention follows representations from salon owners and workers who say the pressures are affecting their ability to invest in their businesses.

‘Increasing pressures’

“Many constituents working in the sector have contacted me to express concerns about the increasing pressures they face. The current VAT regime can act as a barrier to growth, making it harder for salons to employ staff, invest in training and take on apprentices,” she said.

“At a time when we should be encouraging secure employment and developing the next generation of skilled workers, we need to ensure that the tax system supports, rather than hinders, those ambitions.”

The proposed reduction would apply to labour-intensive salon services. Ms Medi has called for its potential effects on employment, training and the sector’s long-term sustainability to be examined ahead of the Budget.

“A number of European countries already recognise the unique challenges faced by labour-intensive sectors such as hairdressing by applying reduced VAT rates. The UK Government should examine whether similar measures could help protect jobs, apprenticeships and the future of our high streets while maintaining a sustainable tax base.”

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