ADVERTORIAL
RETHINKING VAT
How embracing growth can empower your salon business
Research shows a growing number of UK salon owners are keeping their taxable turnover below the VAT registration threshold to avoid added costs and administrative burdens. While it’s understandable to feel strongly about this approach, Vagaro, the leading software for beauty and wellness businesses, is also seeing a shift - many ambitious business owners and growth-focused professionals aren’t letting VAT concerns hold them back.
For those looking to scale, there may be a bigger opportunity worth considering. “We know many salon professionals feel pressure to keep things manageable by staying under the VAT threshold,” says Charity Hudnall, CMO at Vagaro. “But in doing so, they may also be holding themselves back from hiring staff, raising prices, or expanding services, all of which are necessary steps if the goal is to grow.”
A recent analysis by the National Hair & Beauty Federation found that nearly 47,000 UK firms, many are actively working to remain under the VAT threshold. Though this may reduce short-term costs, experts caution it could mean missing out on valuable expansion opportunities.
A Bigger Business Picture
Research shows that businesses earning between £50,000 and £249,000, a group that typically includes VAT-registered salons, have seen year-on-year growth in numbers, signalling increased resilience and scale in this area of the industry. In contrast, salons that cap their earnings may struggle to invest in team expansion, technology, or enhanced services. “We’re seeing a clear trend: salons that cross the VAT threshold often grow into a more stable revenue bracket,” Charity says. “It’s not just about more money, it’s about building a business with a foundation that can last.”
In fact, while the five-year survival rate for businesses in the broader beauty sector sits at around 60%, hair salons, which more often scale and increase turnover, enjoy a higher survival rate of 77%. Suggesting that embracing growth, rather than avoiding tax, can lead to better long-term outcomes.
Managing Growth Without Sacrificing Control
What often gets overlooked is how reducing inefficiencies and streamlining day-to-day operations can help minimise admin costs to help balance out the additional taxes. “Salon owners are incredibly resourceful, and with the right tools, many are able to reduce other operating costs, such as time spent on admin, inventory waste, or missed appointments,” says Vagaro CEO and former salon owner, Fred Helou. “These savings can often help soften the impact of VAT and even position the business to be more profitable in the long run.”
Tools like Vagaro allow business owners to:
• Automate key admin tasks, including appointment booking and reminders.
• Gain visibility into expenses and sales, allowing for smarter financial decisions.
• Track staff hours and payroll with precision, reducing overstaffing or unnecessary spend.
• Manage inventory efficiently, cutting down on over-ordering or product loss.
• Access detailed financial reports, making VAT submissions easier and less stressful.
“VAT doesn’t have to be a barrier.
With the right systems, it becomes just another part of growth, not something to fear,” Fred emphasises.
Reframing the VAT Threshold
Vagaro encourages salon owners to shift the narrative: crossing the VAT threshold isn’t a problem, it’s a sign that demand is growing, business is thriving, and the salon is becoming more established in the market. “For many salons, reaching that threshold means you’re doing something right,” Charity says. “It’s an opportunity to take the business to the next level, with confidence, not hesitation.”
To find out more follow @vagaropro or head to www.vagaro.com/en-gb/pro