Don’t pay more tax than you have to
Claiming allowable expenses as a hairdresser isn’t about avoiding paying tax, it’s about making sure you’re paying what’s fair. AXA’s easy guide explains the ins and outs of allowable expenses to help you understand what you can and can’t claim:
What are allowable expenses?
When you spend money on your hairdressing business, whether that’s on scissors, dyes, straighteners or another business expense, those costs can be written off against tax. This means that any expense which is made wholly and exclusively to keep your business running, you won’t have to pay tax on.
In order to claim these tax benefits, you’ll have to spend a little more time on admin tasks. Reporting your allowable expenses entails keeping a detailed and accurate record of any business incomings and outgoings. You’ll be able to note all of this on your self-assessment tax return when you file one. While it takes a bit of extra effort, the time spend accounting for your allowable expenses will be worth it when you see the big savings on your tax bill at the end of the year.
What expenses can I claim as a Hairdresser?
Equipment
Any of the small and consumable products you use for clients can be claimed including foils, colours, shampoo, conditioner, perm lotion and more. Your small hairdressing equipment such as scissors, hair dryers, rollers, razors, hairbrushes, combs, towels, and brushes for dye can be claimed as well. If any of these equipment pieces start to show some wear and tear, repairing, replacing or upgrading them are costs that can be included on your tax returns as well.
Insurance
As a hairdresser, you tend to work with a lot of chemicals, sharp objects and electrical equipment. No matter how good your training is, there’s a lot of potential for accidents when you’re managing materials like that every day. Having insurance will not only help you feel more secure, but it will also show customers that you’re serious about their safety.
If you decide to get Public Liability Insurance, this will protect you both at your own premises and at others’ so it’s useful to have whether you work at the same salon everyday or if you’re a mobile hairdresser that travels to new clients all the time.
If you have a salon that based in your own home, you may also want to look at business contents insurance, as your normal home insurance might not cover equipment that is used for business purposes. It will also make it easier to separate out and calculate the insurance costs that you can write off as a business expense.
No matter what kind of insurance cover you choose, this can be claimed under allowable expenses so that you can reduce your tax bill.
Marketing
In order to be successful a business will have to spend some money on promoting their business. Any time that promotion costs you money, you can claim it as an allowable expense. That means a website domain and security certificate, Facebook paid advertising, licences for putting signage outside your salon and more can be deducted from your taxes.
Rent and chair fees
Once you find the perfect premises for your salon, costs such as rent or the interest on your mortgage payments can be claimed back. If you’re not renting the whole salon, but just one chair within a salon, even your chair fees are tax deductible. No matter what type of salon set-up you have, it is worth seeing if part of the fees you pay to have a physical premises can be included as your allowable expenses since this is likely one of the largest costs you have as the owner of a hairdressing business.
Uniforms
Claiming clothing can be complicated as an allowable expense as HMRC won’t let you claim any clothing that can be worn in ordinary circumstances. However, there are some exceptions to this rule where uniforms and protective clothing are concerned. Any sort of aprons or gloves that are used to protect the staff and customers when you’re using dyes or other chemicals in the salon can be included as a business expense.
Additionally, uniforms that include a logo and are only used for the job may be able to be claimed as an allowable expense. The laundry and cleaning of any towels, protective clothing and uniforms used by hairdressers will also be deductible from your taxes.
Professional Membership
Joining a professional body can add a certain level of credibility to your business as well as provide you with training and networking opportunities. As long as these organisations are approved by HMRC , then the membership fees can be included in your expenses. Any trade magazines, subscriptions and licences can also be included.
Finances
In order to keep you finances neat and tidy, you may decide to open a business bank account so that it’s easy to track expenses. If opening and maintaining a business bank account comes with any associated fees, you’ll be able to claim that. You can also claim back the interest on any loans or hire purchase agreements and the costs of any accounting or legal fees that mount up as you run your business.
Admin Material
Of course, there are administrative expenses to running a business as well. If your salon has Wi-Fi, landlines or a mobile phone, those are all expenses that you are deductible. The costs of any postage and stationery that you use for day to day business purposes will be allowed by HMRC.
Travel
This category may be most relevant for mobile hairdressers as travel costs don’t apply if they’re just for getting you from your home to your place of work, but if you’re a mobile hairdresser there’s a lot of travel-related costs that you’ll be able to write off. This can include fuel, vehicle maintenance and repairs, road tax, MOTs, parking fees and tolls, among other expenses.
If you’re a mobile hairdresser, you vehicle is an essential tool for your business, so you may also want to consider getting van insurance in case of any damage, accidents or breakdowns so that you can continue to run your business with minimal interruptions. Like all other kinds of insurance, this would be an allowable expense as well.
For hairdressers that work in a salon, you may also have some vehicle claims you can make if you are driving to pick up supplies for your business rather than having new products delivered. Just make sure that any mileage you claim was accrued solely for business purposes.
Working from home
If you’re a salon owner or a mobile hairdresser, you may occasionally do some business admin from home but the majority of your work takes place in the salon so it may be more trouble than it’s worth to try and calculate working from home costs. However, if you have an in-home salon, you will definitely want to calculate and claim the expenses that you’ll have from working at your place of residence.
You’ll have to run the numbers and work out proportionally how much of your heating, electricity, water bills and other expenses go towards making your business run but you will be able to claim some of these costs back. Just be sure to have a clear justification and reasoning on how you worked out your proportions incase HMRC enquires about it.
Just remember the golden rule: you can only claim this that have been incurred for the sake of running your business. If in doubt, check the HMRC guidance on claiming allowable expenses for people who work from home.
How do I claim allowable expenses?
The trick to keeping on top of all the allowable expenses leaving your business is to record everything. When you add up all of your allowable expenses for the tax year, you put the total amount on your Self-Assessment tax return. At this stage, you don’t need to include receipts, but it’s still important to keep accurate records for a period of up to six years. HMRC can ask you to produce those receipts at any time during that period and you’ll want to have them to avoid being fined for proving inaccurate information.
To stay organised, set aside a specific time each week to make a note of the business expenses that you're liable to receive tax relief on so you don't lose out on any money. Note it all down in a spreadsheet that you continuously update. If you’ve tried that and you’re struggling to stay on top of things, consider investing in accounting software to help you track your finances – there are plenty of inexpensive and free options to choose from.
Simplified expenses for self-employed hairdressers
For mobile hairdressers or in-home salon owners, you may want to take a look at simplified expenses which give flat rates you can calculate business expenses on rather than trying to track it precisely. While you may get back a little less money this way, you might also save a lot of time that you would otherwise spend tracking and calculating your actual business costs.
Simplified expenses flat rates are available for calculating vehicle costs and working from home allowances, both of which may apply to hairdressers depending on your business model. To find out about how to use the simplified expenses process, read more on the HMRC website.
All links are checked and valid at time of publishing, 22 March 2022.
