The changes will also affect the costs of running a business, including employer National Insurance (NI) contributions and Corporation Tax.
Here’s how the new budget will impact businesses:
The Energy Bill Relief Scheme announced earlier this week was confirmed, meaning that businesses including beauty salons will get support for covering the cost of energy. This discount is applied automatically and will take effect from businesses’s October bill, usually received in November.
The recent 1.25% rise in NI which was introduced in April to fund health and social care will be reversed from November 6, 2022.
This means that employers will have to contribute less NI for staff, so the cost of employing labour will go down. Employees will have less NI coming out of their wages, and those who are self-employed will pay less NI on their profits.
Changes to NI should come into effect in most people’s November pay packet. The more people earn, the more they will benefit from this change.
The previous chancellor, Rishi Sunak, had announced plans to increase Corporation Tax from 19% to 25% from April 2023. This was scrapped in the September 23 mini budget, with the new chancellor claiming that it would put £19 billion a year back into the economy.
From April 2023, the basic rate of tax will be cut to 19%. Currently, people in England, Wales and Northern Ireland pay 20% tax on income from £12,571 to £50,270.
Kwarteng says this cut will benefit 31 million people with an average £170 a year reduction in tax.
Additionally, the 45% additional rate of tax which is paid by people who earn more than £150,000 a year will be abolished in April 2023. Instead, the 40% higher rate for earnings of over £50,270 will be the top rate.
In addition to the cost-of-living crisis, the beauty and spa industries have been facing a recruitment crisis for some time. The chancellor has announced some measures which may encourage more people to seek employment.
Rules around Universal Credit will be changed, meaning that people’s benefits will be reduced if they don’t fulfil their job search commitments. Around 120,000 people on Universal Credit will be asked to take active steps to seek more work or risk having their benefits reduced.
Kwarteng also announced extra support for unemployed people aged over 50 to help get them into work.
However, there is no guarantee that these measures will attract the skilled and qualified employees required in the beauty and spa industries.
Richard Lambert, chief executive of the National Hair and Beauty Federation (NHBF), said, “The chancellor’s bold statement represents a small break in the perfect storm. The cancellation of the NICs (National Insurance Contributions) rise and cut to Corporation Tax will be welcomed by many hair and beauty businesses.
“However, even after these cuts and the Energy Bill Relief Scheme, salons and barbershops will still face a turbulent winter of increased costs. We urge the Government to consider adding 100% business rates relief as part of its ‘ambitious package’ of reforms later in the autumn.”
Article written by Ellen Cummings and originally featured here
This week we chat to Hannah Beth, Manicurist and Educator, and get her to answer our favourite 10 questionsREAD MORE...
The beauty industry is working tirelessly each day to become cleaner and greener, however, this is not always a financially viable goal for small businessesREAD MORE...
The government brought forward an amendment to the Health and Care Act 2022 which gives the Secretary of State for Health and Social Care the power to bring into force a licensing scheme in England for non-surgical cosmetic proceduresREAD MORE...