The Impact of the Spring Budget 2024 on the Beauty Industry

The Spring Budget 2024 announced by the UK government includes several measures aimed at supporting small businesses and individuals in the wake of economic challenges. For the beauty industry, particularly beauty businesses, this budget introduces significant changes and offers potential benefits. Let’s breakdown the key changes.

Extended Household Support Fund

The budget extends the Household Support Fund for an additional six months. This extension is crucial for vulnerable households dealing with the cost-of-living crisis and indirectly supports beauty businesses by potentially increasing consumer spending power.

National Insurance Reductions

The government has reduced the main rate of employee National Insurance by 2p, from 10% to 8%, effective from April 2024. This cut aims to boost take-home pay for millions of workers, including those in the beauty industry, thereby increasing disposable income and potentially driving up consumer spending in beauty services and products.

VAT Registration Threshold Increase

The VAT registration threshold has been increased from £85,000 to £90,000, starting from 1 April. This move is expected to take around 28,000 small businesses out of paying VAT, benefiting many small beauty businesses by reducing their tax burden and simplifying their financial operations.

High Income Child Benefit Charge Adjustment

The threshold for the High Income Child Benefit Charge has been raised from £50,000 to £60,000, with the full benefit withdrawal not occurring until an income of £80,000 is reached. This change could indirectly benefit beauty businesses by increasing the disposable income of families, potentially leading to increased spending on beauty services.

Fuel Duty Cut Extension

The government has extended the 5p cut on fuel duties for another 12 months, aiding businesses and consumers alike by reducing travel and transportation costs. This could lower operational costs for mobile beauty businesses and make beauty services more accessible to consumers.

The British Association of Beauty Therapy and Cosmetology (BABTAC) has expressed cautious optimism regarding the budget, CEO and chair of BABTAC and CIBTAC, Lesley Blair MBE comments, “The ongoing cost-of-living crisis has affected everyone and remains a huge concern for many beauty businesses. We’re hopeful that this budget will offer some relief, welcoming in particular the increase to the VAT threshold, given our ongoing appeals to government for VAT reform for our sector.”

She continues, “However, as one of the hardest hit industries during and post-pandemic (estimated to be an average financial loss of £11,603 on earnings[1]), we believe far more needs to be done to encourage the emergence of new talent and growth in our sector. Not only are we a proven leading contributor to UK economy, but also a sector unique in our ability to improve the wellbeing of society, while supporting the revival of the British High Street. We believe more support should therefore be forthcoming and will continue to liaise with government to secure this.”

Similarly, the National Hair & Beauty Federation (NHBF) welcomed the VAT threshold increase but called for further VAT reform and support for apprenticeships. Caroline Larissey, Chief Executive at the National Hair & Beauty Federation said, “We’re pleased that the Government has answered our call for changes to VAT with the raising of the VAT threshold, taking into account inflation. However, there’s more to do. We welcome further discussions with HM Treasury around future VAT reform to ensure a fairer system and to help level the playing field in the hair and beauty sector, including options for reduced rates and tiered rates around the threshold.

However, the silence was deafening on support for apprentices. National Insurance (NI) cuts will benefit the self-employed but where is the support for employers? With wages rising in April, few small and micro sector businesses can afford to take on staff and apprentices and grow the sector. We call on the government to support these businesses, largely female entrepreneurs, bolstering the high street and championing wellbeing in the community”.

The full Spring Budget can be found here.