Plaid Cymru MP calls for VAT cut to save salon jobs
Llinos Medi urges the Chancellor to halve VAT on hair and beauty services, citing threats to apprenticeships and rising self‑employment in salons.
Plaid Cymru MP Llinos Medi has written to Chancellor John Healey urging a halving of VAT on hair and beauty services ahead of the autumn Budget.
In a letter dated 23 September, Medi asked the Treasury to consider a reduced 10 % rate for labour‑intensive salon work, arguing that the current 20 % levy is squeezing jobs and apprenticeships.
The appeal follows concerns raised by salon owners and workers across her Ynys Môn constituency, who say the tax burden is driving businesses towards self‑employment models to stay afloat.
The British Hair Consortium backs the proposal, noting that wages form the bulk of operating costs for salons and that the standard VAT regime disproportionately affects such labour‑heavy enterprises.
Under existing rules, businesses must register for VAT once taxable turnover exceeds £90,000 in a rolling 12‑month period, a threshold based on turnover rather than profit.
Campaigners argue that crossing this limit can deter expansion, while rising employment costs make it harder for salons to retain staff and train new recruits.
“I am particularly concerned to hear from businesses in my constituency that the cost of VAT is having an impact on the number of apprenticeships available for young people, as there is an increasing shortage of employers who can afford to employ and train them,” Medi wrote.
She described salons as a traditional route into employment for young people and asked what consideration the Chancellor had given to the consortium’s proposed reduction.
The letter also warned that the VAT threshold and rising labour costs are accelerating disguised self‑employment, with consequences for secure jobs and tax revenues.
“Local salons tell me that the current system increasingly pushes businesses towards self‑employed models simply to remain viable.” While genuine self‑employment has an important place in the economy, we should be concerned when tax pressures encourage businesses away from direct employment,” she said.
Salon owners have echoed the MP’s concerns, saying the tax pressure limits their ability to invest in equipment, marketing and staff development.
“Many constituents working in the sector have contacted me to express concerns about the increasing pressures they face.” The current VAT regime can act as a barrier to growth, making it harder for salons to employ staff, invest in training and take on apprentices,” Medi added.
She noted that at a time when the government is encouraging secure employment and skills development, the tax system should support rather than hinder those ambitions.
European neighbours such as France and Germany already apply reduced VAT rates to labour‑intensive sectors like hairdressing, a precedent Medi suggests the UK could follow.
“A number of European countries already recognise the unique challenges faced by labour‑intensive sectors such as hairdressing by applying reduced VAT rates.” The UK Government should examine whether similar measures could help protect jobs, apprenticeships and the future of our high streets while maintaining a sustainable tax base,” she argued.
The Treasury has not yet responded to the request, but the issue is expected to feature in the forthcoming Budget discussions.
Industry bodies say that a lower rate could boost employment, increase apprenticeship numbers and reduce the incentive for disguised self‑employment, potentially widening the tax base in the longer term.
Opponents of a VAT cut warn that it could reduce revenue at a time when public finances are under pressure, and that any change should be carefully modelled.
Nevertheless, the call for a targeted VAT reduction adds to growing pressure on the government to address the challenges facing small, labour‑intensive businesses across the UK.