Autumn Budget 2026 tax changes challenge nail businesses

The Autumn Budget has increased the Small Business Rate Relief threshold to £18,000, exempting 70,000 businesses including 1,700 salons from business rates and freezing rates for two years. This change applies to retail, hospitality, and leisure businesses, with other qualifying firms seeing their rates frozen for the same period. The measure will be funded by increased taxes on gambling.

Wage and cost pressures

National Minimum Wage and National Living Wage will increase by 3.9% from April 2027 for 2.3 million workers. This follows a 26% rise in minimum hourly wages over the last two years, creating significant cost pressures for salon owners. The National Hair and Beauty Federation highlighted National Insurance Contributions, rising energy costs, and business rates as key concerns in its latest sector survey.

Business survival concerns

Survey data reveals only 65% of businesses expect to survive the next six months without difficulty. The hair and beauty industry employs many people and serves as a training ground for young professionals. This uncertain outlook comes despite some supportive budget measures.

Price increases and recruitment challenges

Faced with rising costs, 72.6% of businesses plan to increase prices within three months. Recruitment is also suffering. Only 20 out of more than 400 salons plan to recruit an apprentice in the next three months. The government did not include a VAT reduction from 20% to 10% on hair and beauty services, a measure the industry had sought.

Several other budget measures will affect salon finances. The tax-free mileage rate will remain at 55p per mile for the first 10,000 business miles permanently, increasing from 25p to 35p per mile for distances above that from April 2027. The Trading Allowance will triple from £1,000 to £3,000 per year from April 2027. A Young Entrepreneurs Allowance will cover a year of living costs for young business founders, and the British Business Bank will double its commitments to women-led businesses to £200 million.

For employees and clients, some household cost relief is coming. The standing charge on household gas bills will be scrapped from 2027 or as soon as possible after, saving around 23 million UK households £45 per year on average. Up to 20 million households in England in council tax bands A to D will receive a £100 one-off Household Energy Payment from January 2027. The VAT cut on electricity will extend to July 2027, taking £50 off the annual price cap. The 5p cut to fuel duty has been extended until July 2027. Eligible self-employed fathers, partners and adopters will receive up to two weeks of parental pay at £194 per week from April 2029.

The budget's central relief for small salons remains the raised business rate threshold. It exempts 70,000 businesses from the levy altogether.