HM Revenue and Customs (HMRC) has published new guidance to help professionals working in the hair and beauty industry determine their employment status for tax purposes – particularly those using the rent a chair model.
Developed in collaboration with industry stakeholders, the guidance includes easy-to-follow information about common working practices and how they relate to employment status. It explains how HMRC’s Check Employment Status for Tax (CEST) tool can help determine whether an individual is employed or self-employed for tax purposes.
The guidance is user-friendly and includes examples of common scenarios that indicate whether an individual might be employed (such as having set working hours determined by the salon or shop) or self-employed (such as setting your own prices and maintaining your own client list).
Kelvin Shorte, Deputy Director, Taskforces & Specialist Compliance, HMRC, said: “We understand the hair and beauty industry operates with various working arrangements and it’s vital that both barbershop owners and professionals get their tax status right. This new guidance responds directly to requests from the industry for clearer, sector-specific information.
“Whether you’re a barbershop owner with staff or someone who rents out chairs in your premises, this guidance will help you understand your obligations so you can get your tax right first time.”
The British Hair Consortium commented: "HMRC are paying very close attention to employment status. It is important that anyone engaging any workers ensure they determine the correct status."
Also embedded in the guidance page is a new video, clarifying that employment status isn’t a matter of choice and outlines the different tax obligations for employed and self-employed individuals. It also includes information about VAT registration requirements and the importance of written agreements when renting a space.
Read next: Increased Employment Costs Impacting Barbershops Across the UK
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