Budget 2021: How it will impact beauty

Arguably the most important Budget for UK businesses in a generation, this is how the outlook for 2021 will affect beauty companies

England's personal care sector is expected to benefit from a host of grants and reliefs announced in chancellor Rishi Sunak’s Budget yesterday.

Offering some comfort to struggling salon, spa and beauty owners, the new Restart Grants earmark £5bn of government funds for a one-off cash grant of up to £18,000.

The grant has also been offered to hospitality, leisure and gym business in England.

The move has been welcomed by the British Beauty Council (BBC), a representative for the industry, which has been pressuring the government to provide salon owners with a dedicated personal care fund.

Since the start of the third England-wide lockdown, hairdressers, beauty salons and spas have been unable to welcome customers while the country grappled with the exponential rise of Covid-19 cases.

Along with the cash injection, Sunak has promised an extension of the furlough scheme until September, as well as the Self Employed Income Support Scheme (SEISS).

The Budget confirms that the fourth SEISS grant will be set at 80% of three months’ average trading profits, capped at £7,500.

According to the BBC, 60% of people who work in hairdressing and barbering are self-employed and, in beauty, 65% are self-employed.

“Together, these new measures form a stronger package of long-term recovery for the sector,” said the BBC’s COO, Helena Grzesk.

“We are delighted by the recognition that the UK government has shown in our industry.

“Salons, spas and beauty businesses are the cornerstone of UK high streets and will be instrumental in kick-starting the economy and we look forward to working across the industry to get it back on its feet.”

Meanwhile, some 750,000 businesses will be eligible for relief from the controversial business rates tax.

Businesses have been relieved of their business rates taxes for the 2020 tax year, however, the government has been hounded by bricks-and-mortar businesses for a reform of the ‘outdated’ tax.

The VAT battle continues

Not appeasing the BBC was the Chancellor’s decision not to cut VAT for hair and beauty businesses.

The organisation said it was “bitterly disappointed” by the outcome and that it would continue to lobby for a reduction of VAT to 5% from 20%.

Millie Kendall, the BBC’s CEO said the move would be imperative for businesses recovery from the crippling effects of the pandemic.

“It seems like a simple mechanism which would help activate recovery for a services-based sector and help keep staff employed,” she added.

The BBC’s Chop the VAT campaign garnered attention from celebrity salon owners Adam Reed, Luke Hersheson, Nicola Clarke and Charlotte Mensah to put mounting pressure on the government to cut the tax, which has been offered to the UK’s hospitality sector.

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