Spring Statement 2019 and what it means for your salon business
The Spring Statement, which was presented to Parliament on 13 March, included announcements around apprenticeship costs, help to cut your energy bills and - unsurprisingly - Brexit.
Andrew Barraclough, director of Salonfrog, an accountancy firm specialising in hair, beauty and barber businesses, gives his insights into the implications for salon owners and self-employed hair and beauty professionals.
He said, “In a nutshell, the economy is currently close to recession and Hammond is relying on a decent Brexit deal, which he believes is enough to start a spending review.
“This in turn will put money back into the economy which is good for the hair and beauty industry. However, we wait to see!”
What is the Spring Statement?
The Spring Statement is one of two economic statements made by the Chancellor of the Exchequer every year.
It doesn’t usually include new announcements on tax and spending (that's the Budget’s job in the autumn) but it can include new forecasts for economic growth.
“Unsurprisingly, much of Philip Hammond’s speech focused on Brexit and the ‘the cloud of uncertainty’ over the UK economy”
The UK economy
The latest figures from the Office for Budget Responsibility (OBR) forecast that the UK economy was below what was expected - 1.2% rather than 1.6%. Yet it’s not all doom and gloom says Andrew.
“The growth forecast in the Statement is lower than the one issued last month by the Bank of England which shows how fickle these estimates are.
“Okay, the forecast is lower than predicted last October but on a positive note, it’s still growth. This means both the OBR and the Bank of England expect consumer and Government spending to increase over the coming three years.
“And the hope is that this could flush through to the hair and beauty industry, in that people may spend more.”
Unsurprisingly, much of Philip Hammond’s speech focused on Brexit and the “the cloud of uncertainty” over the UK economy.
Andrew says, “The Statement says that the Government will undertake a spending review should a Brexit deal go through, putting an end (or at least loosening) the period of austerity.
“Such spending should increase confidence in the UK economy and so lead to more business investment. This should mean more money into the economy - creating more jobs - and so give hair and beauty clients more cash to spend.”
It’s good news if you’re wanting to take on an apprentice at your salon or barbershop.
The Chancellor has promised £80 million to help get three million new apprenticeships started by 2020.
Andrew says, “If you have an apprentice, you currently pay 10% of any training course you send them on and the government pays the rest. From 1 April 2019, that will be reduced to 5%. If you’re thinking of taking on an apprentice it’s a bit of a cost saving for you, although it’s slightly offset because the minimum wage goes up at the same time.
“It may also be a way of attracting young talent to your salon - if you’re offering an apprenticeship you’re likely to get better quality employees in.”
Help to cut your salon’s energy bills
The government is looking at ways help small businesses lower their energy bills and cut their carbon emissions.
This is all part of a bid to tackle climate change and could effectively mean lower bills for your salon or barbershop.
“At the moment the Government have produced a document and are asking for input on how the cost of energy can be reduced”, says Andrew. “It could be months before we hear anything but it’s one to keep an eye on for salon owners.”
“We will help small businesses cut their carbon emissions and their energy bills, publishing today a call for evidence on the Business Energy Efficiency Scheme announced at the Budget.” #SpringStatement pic.twitter.com/Z91CgGcenv— HM Treasury (@hmtreasury) March 13, 2019
5 things you need to know from the 2018 Budget
While the Spring Statement focused on forecasts for the UK economy, the Budget in October 2018 set out specific tax and VAT changes. Many of these will all have an effect on your hair and beauty business from April and include:
- Your personal allowance (how much you can earn before paying income tax) has increased to £12,500.
- Business rates for salons and barbershops with a rateable value of £51,000 or less will be cut by a third until 2021.
- The National Living Wage will rise by 4.9% from £7.83 to £8.21.
- If your salon or barbershop is VAT registered, you’ll have to keep your VAT records digitally. You’ll also need to submit your VAT returns using Making Tax Digital (MTD) software.
- If your salon has an automatic enrolment workplace pension scheme, the minimum contributions you and your staff pay into your will increase from 6 April (rising to 3% for employers and 5% for employees).
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Salon services isn’t a financial advisor, this information is for reference only.