3 minute read
Getting Your Employment Status Right
HMRC’s Kevin Hubbard explains why it matters for hair and beauty professionals.
Working in the hair and beauty industry means being part of a vibrant, creative sector where the flexibility to work in different ways is thriving. In HMRC, we understand that while this flexibility brings tremendous opportunities, it can also create genuine confusion about tax responsibilities.
That’s why we’ve recently published new guidance specifically for your industry. This has been developed directly in response to requests from industry representatives who told us they needed clearer direction.
Understanding the ‘Rent a Chair’ reality
Part of the guidance covers the ‘rent a chair’ model, which has become increasingly common across this sector. Here’s where a crucial misconception needs addressing: just because you rent a chair doesn’t automatically make you self-employed for tax purposes. Your employment status isn’t determined by the label attached to your arrangement, but by the reality of how you actually work. This determines who’s responsible for paying Income Tax, National Insurance contributions, and potentially VAT.
Let me illustrate with two scenarios that might feel familiar.
• Take Sarah, a stylist whose shift pattern is decided by her salon manager. She’s paid a fixed hourly rate, has clients assigned to her and works to appointment times set by the salon. Sarah should be classed as employed for tax purposes and wouldn’t need to pay the ‘chair rental’.
• Now consider Mark, who, in addition to renting a chair, provides services to his own clients, buys his own products, sets his own schedule, determines his own prices and clients pay him directly. Mark is genuinely self-employed.
The difference lies not in the rental arrangement, but in the level of control, financial risk and integration with the business.
When it’s not clear-cut
Many professionals find themselves with a mixture of employed and self-employed characteristics (something you might relate to). This is where our Check Employment Status for Tax (CEST) tool becomes invaluable. It’s a free online tool that walks you through questions about your working arrangements and provides guidance on your likely status.
Check it out at www.gov.uk/guidance/checkemployment-status-for-tax
Why getting it right matters
Understanding your employment status affects your rights, responsibilities and financial planning:
• If you’re employed, your employer handles your tax deductions through PAYE and you’re entitled to employment rights.
• If you’re self-employed, you’re responsible for registering for Self Assessment, maintaining records, and paying your own tax and National Insurance contributions. For salon owners, if you’re renting out chairs to genuinely self-employed professionals and your turnover exceeds the VAT threshold, you’ll need to register for VAT and charge it on the rent.
See the breakdown at: www.gov.uk/how-vat-works/vat-thresholds
Our guidance
This guidance represents part of our broader approach to supporting compliance in your sector. We believe in promoting understanding through clear guidance and practical tools, while taking targeted action where we identify businesses that aren’t meeting their obligations. Our focus remains on helping compliant businesses thrive whilst ensuring everyone pays the tax that’s due.
Taking action
I encourage everyone running salons, barbers and beauty clinics to review this guidance. It’s designed to be user-friendly, with practical examples you’ll recognise, and includes an explanatory video that takes you through how tax works in your industry.
If you work in a salon, getting your employment status right from the start helps you avoid complications later. The guidance is available on GOV.UK, and I recommend using the CEST tool if you’re unsure about your situation.
www.gov.uk/guidance/checkemployment-status-for-tax
