Tax changes mean salons will need to make payroll a priority in 2015

The tax changes unveiled by chancellor George Osborne in his Autumn Statement in December will make it even more important salons are on top of their game when it comes to administering their payroll and ensuring they are paying staff correctly, the NHBF has said.

The chancellor announced salons that take on apprentices aged under 25 will from April 2016 no longer have to pay national insurance contributions (NICs) on their earnings.

Mr Osborne described the move as getting rid of the “jobs tax on young apprentices”, potentially benefiting employers of around half a million apprentices from April 2016.

The move is in addition to the change coming in from April 2015 whereby employers will no longer have to pay NICs for any employee aged under 21.

However, the NHBF is warning salons that both changes, while potentially positive for the industry, will mean salons will now need to be reviewing their payroll and payment processes and systems.

HM Revenue & Customs, for example, has emphasised the changes will mean it will become even more important salons hold the correct date of birth of all employees and that their systems can adjust to when an employee has a birthday.

This is also something vital for ensuring a salon is paying the correct national minimum wage, especially given that fines for getting this wrong are due to rise sharply – to £20,000 per underpaid employee – from next summer.

NHBF chief executive Hilary Hall said:

We’re delighted the chancellor is abolishing employer NICs on the earnings of young apprentices. This will benefit the many, many hairdressers and barbers who invest in, and are committed to, youth training and employment.

“But these changes will also potentially mean an extra administrative burden for many salons, and so we urge salons to spend the time between now and next April – when the first change comes in – reviewing and, if need be, upgrading their payroll systems and processes to ensure they will be compliant.”

The chancellor also announced a number of other significant changes in his Autumn Statement.

The government will be extending for another year 100% Small Business Rate Relief (in other words not having to pay any business rates) for firms with properties valued at less than £6,000. Businesses valued up to £12,000 can get relief on a sliding scale.

The relief will now be available until the end of March 2016 rather than coming to an end in March 2015.

A business rate discount for shops valued at £50,000 or lower will also be increased, to £1,500 from £1,000, from April next year.

Finally, Mr Osborne announced the government is to carry out a review on the “future structure” of business rates, to report in next year’s Budget.

Paul Curry, NHBF’s President said: “The NHBF has long argued the current system of business rates based on property values puts high street shops at an unfair disadvantage to out-of-town and online retailers.

“A ‘structural’ review of business rates will potentially be welcomed by hard-pressed high street hairdressing salons and barber shops. The extension of small business rate relief for another year is also welcome. But we’d believe it’s high time this relief became permanent so salons know exactly where they stand rather than having to rely on political generosity year after year.”