On March 26, Chancellor Rachel Reeves shared the Spring Statement, reflecting on the changes made in 2024's Autumn Budget, and announcing adjustments for the forecasts ahead.

Opening her speech, she said that the decisions made in the October Budget were "non-negotiable", and that they will bring stability to the economy.

In the 2024 Autumn Budget, the Chancellor presented an increase in minimum wage, National Insurance freeze for employees and changes to business rates.

But what does the new Spring Statement mean for beauty businesses? Here’s what you need to know…

Key Points

• Welfare cuts for new claimants: The government plans to implement welfare cuts aimed at new claimants, with the goal of saving £4.8 billion. This could affect potential employees in the beauty industry who rely on certain benefits, potentially influencing their availability or willingness to work.
• Crackdown on tax avoidance and evasion: There are no further tax increases in this statement but an initiative to raise £1 billion through stricter enforcement against tax avoidance and evasion has been announced. Salon and spa owners should ensure their tax affairs are in order to avoid penalties, as small businesses may be scrutinised more closely.
• No further tax increases announced: There are no additional tax increases at this time which will allow business owners to plan their finances without the concern of further increased tax burdens.
• Economic growth and inflation forecasts: The Office for Budget Responsibility (OBR) has forecasted steady GDP growth and a reduction in net debt starting from 2026-27. Additionally, inflation is projected at 3.2% for this year, which is higher than previously expected. These economic indicators could influence consumer spending patterns and potentially impact revenue.

Industry Response

In response to the Spring Statement, Caroline Larissey, Chief Executive of the National Hair & Beauty Federation (NHBF) said: "There is nothing in this statement to support the hair & beauty sector.

"We’re a vibrant sector worth £5.8 billion to the UK economy, supporting thriving high streets, youth employment and community wellbeing. However, with 60% staff costs typical for sector businesses the Autumn Budget measures weigh heavily on the sector.

"Today’s statement is a snub to hardworking female entrepreneurs in the sector who have been forgotten. We’re not mentioned in the Industrial Strategy and despite having a long history of giving valuable careers to young people, we’re missing out on targeted support for apprentices, with other sectors such as construction being prioritised.

"Our ‘Straightening out the costs’ report modelled the impact of the Autumn Budget measures (wage rises, NICs changed) on the sector - £139m overall, meaning £25,000 additional annual costs for a small sector business. Businesses are responding by increasing prices, reducing staff/apprentice hours and reducing the number of employees - on average 2.7 full-time equivalent staff and one apprentice per business.

"Overall taxes to the Exchequer are expected to decrease by 4% (£44m) and 19% (a significant 9000+ businesses) will shift to self-employed model further reducing tax receipts. It’s hard to see where growth fits into this - salons, young people and the government are all missing out.

"We will continue to lobby the government for urgent VAT reform, targeted support for employers taking on apprentices, more flexible apprenticeships and business rates relief for those with" multiple salons – for all businesses making a significant contribution to their local area."

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Article written by Erin Leybourne for Professional Beauty and can be found here

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