Campaigning for you: VAT
The NHBF does a huge amount of campaigning and lobbying on behalf of its Members. In the first of a new series that focuses on this important area of our work, the NHBF’s director of policy and public affairs Victoria Brownlie (below) explains the latest on our campaign to cut VAT for hair and beauty businesses.
What’s it all about?
We wanted VAT for salons and barbershops to be cut to 5% to help our sector survive during the coronavirus outbreak. The government reduced VAT to 5% for hospitality businesses to help them through the pandemic, and so we believe the same should have applied to our sector.
VAT reform has been a long-running campaign for the NHBF. Before the pandemic we were already lobbying for:
- A lower VAT rate for labour intensive industries such as hair and beauty.
- Tiered VAT rates so a large bill is not payable as soon as the VAT threshold is reached.
VAT reform has been a long-running campaign for the NHBF.
What did the ‘5%’ campaign involve?
We joined forces with the British Association of Beauty Therapy & Cosmetology (BABTAC), British Beauty Council (BBC) and UK Spa Association (UKSA) to fight for this one.
We did huge amounts of research and attended regular meetings to present our case to a number of key government departments including the Department for Business, the Cabinet Office, the Treasury and No.10.
The NHBF also funded an independent report by economic specialists Pragmatix Advisory. The report made a robust case for a cut in VAT to 5%, showing that it would be cost-neutral for the UK Treasury.
What was the outcome?
Unfortunately, after a tremendous amount of hard work and many late nights researching and writing papers in support of our case, the government said no.
We were hugely disappointed for everyone in the hair and beauty business who would have benefited so much if the VAT cut had gone ahead.
Why did the government say no?
We have held a number of meetings with government to ask this exact question! The government said:
- Because only about a quarter of our sector is VAT registered, it decided that there were better ways of providing financial support to hair and beauty businesses.
- For various reasons, it would be a long and tricky process to sort out the admin. For example, the government pointed out that our sector does not have its own VAT code. (Hospitality and leisure already have a separate VAT code.)
The financial problems caused by the pandemic was our single strongest argument for a cut in VAT to 5%.
Our pre-pandemic goals for VAT will become a priority again.
As businesses start to recover, we are now taking stock and rethinking our approach. Our pre-pandemic goals to reduce VAT and introduce a tiered approach to VAT rates will become a priority again in our longstanding campaign for tax reform.
What are the positives?
As part of our VAT campaigning which highlighted the financial challenges being faced by hair and beauty businesses, we achieved many other important ‘wins’ for our sector, including:
- The higher Restart Grant of up to £18k instead of £6k.
- Further support for the self-employed.
- More discretionary funding for local authorities to award to hair and beauty businesses in need.
We also successfully lobbied for hair and beauty to be among the first businesses to reopen after the latest lockdown.
Onwards and upwards! Watch this campaigning space.
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The NHBF campaigns at the highest levels to protect and promote our Members' interests. Find out what we've achieved and which issues we're currently campaigning about, including business rates, self-employment and VAT. Find out more.