Written for owners of hair salons, barbershops, beauty, nail, lash and brow businesses, spas and massage, tanning, tattoo and piercing studios and non-surgical aesthetics clinics in England, Wales, Scotland and Northern Ireland.
The short version
- Ring-fence voucher, course and deposit money.It pays for work you have not done yet. Treat it as service still owed, not profit, so redemptions have cash behind them.
- Lay out the next 13 weeks.Week by week: takings, voucher redemptions, wages, rent, product orders, VAT and PAYE. Then you see the January and August dips coming.
- Work out what a deposit would save.Measure your no-show rate for 8 weeks. Then cost your no-shows with and without a deposit, before you pick its size.
Salon cash has a rhythm. December and the weeks before holidays peak; January and August dip. On top of that, a lot of what you take in a busy month pays for work you have not done yet: gift vouchers, prepaid courses and deposits. Spend that money as profit and the bill arrives later, when clients come in to redeem.
Build a 13-week cash view
Lay it out week by week, so you can see the dips coming. Greymill can build it from your booking system and Xero or QuickBooks when they are connected.
- Takings by service line, net of card fees.
- Deposits and voucher sales, shown as cash now with the service still owed.
- Rent coming in from chair or room renters.
- Wages and commission, and tips paid out by the end of the month after they were received.
- Product orders, rent and business rates.
- The VAT quarter and PAYE.
In February the redemptions arrive with no cash behind them. The money was a liability, not profit.
VAT is due when you are paid or invoice, whichever is first
VAT is due when each payment is received or invoiced, whichever is first, so a prepaid course of six facials is taxed up front and a deposit carries VAT when you receive it. A deposit you keep on a no-show or a late cancellation stays taxable, so the return is not adjusted. A voucher for one VAT rate at one salon is single-purpose: its VAT is due when you sell it, and stays due if it is never redeemed. As of Oct 2026.
VATA 1994 s.6(4) and Sch 10A; HMRC VAT Supply and Consideration manual VATSC05825; Revenue and Customs Brief 2 (2022)
What a deposit policy is worth
No-shows are column hours you cannot sell again. Work out what a deposit is worth to you before you choose the size; the contracts lesson covers what you can fairly keep.
| Lost to no-shows if the rate falls to 3%: 120 x £60 x 3% | £216 |
| Less deposits kept on those no-shows: 3.6 x £12 | -£43.20 |
| Weekly loss with deposits | £172.80 |
| Weekly improvement on today's £576 loss (120 x £60 x 8%) | £403.20 |
£576 minus £172.80 = £403.20 a week; x 52 = £20,966.40 a yearThe fall from 8% to 3% is an assumption. Measure your own no-show rate for 8 weeks. These are takings including any VAT. A VAT-registered salon keeps 5/6 of them at the 20% standard rate, so its saving is £336 a week, and a £12 deposit carries £2 of VAT. As of Oct 2026.
If you need funding, the routes are an overdraft, asset finance for equipment or, for a new owner, a Start Up Loan. Lasers are often leased: before you sign, work out how many courses at what price cover the payments, and check your insurer will cover the treatments. Avoid merchant cash advances that take a share of your card takings.
Asked in Greymill
Spend it now and in February the vouchers come back with no cash behind them. Ring-fence it, and show the likely redemptions week by week in a 13-week cash view.
What a £12 deposit could save:
No-shows now: 120 x £60 x 8% = £576 a week
If they fall to 3%: £216, less £43.20 of deposits kept (3.6 x £12) = £172.80
Saving: £403.20 a week in takings, £20,966.40 a year
The 3% is an assumption, so measure your real rate for 8 weeks first.
If you are VAT registered: the saving is £336 a week after VAT. Each £12 deposit includes £2 of VAT (As of Oct 2026), and a kept one stays taxable. On a voucher for one VAT rate at one salon, VAT is due when you sell it, used or not.
Give me your weekly figures and I will lay out those 13 weeks.
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a salon or beauty business in the UK. Build me a 13-week cash flow starting [date]. Weekly takings by service line [figures], card fees [rate], vouchers and courses sold but not yet redeemed [amount], deposits held [amount], chair or room rent coming in [amount], wages and commission [amounts], product orders [amounts], rent and business rates [amounts], my VAT quarter end [month] and PAYE [amount]. Show the weeks where voucher redemptions land with no cash behind them, and what a deposit of [amount] on bookings over [price] would be worth at my no-show rate of [rate].
More for beauty, hair and aesthetics in the UK
- Pricing a colour or treatment so it still pays after commission and VATPrice each service from product cost and the stylist's time, then check what is left of every pound once VAT, commission and product come out.Read the lesson
- Rent-a-chair and VAT: could HMRC say every stylist's takings are mine?Chair rent is VAT-able, and if the salon in reality supplies the haircut, every self-employed stylist's takings count towards your VAT turnover.Read the lesson
- Adding microblading, piercing, laser or lip filler: what do I need before the first client?Every salon has safety duties, and a treatment that breaks the skin, uses a laser or involves a prescription-only medicine adds licensing, age rules and insurance duties that differ in each of the four nations.Read the lesson
- Deposits, no-show fees and course packages: what can I actually keep?Booking terms only hold if clients see them before booking, they are fair, and they respect the rules on cancellations, courses, memberships and prices.Read the lesson
- Commission-only stylists, self-employed barbers and card tips: am I breaking the law?How you pay and organise your team decides whether they are workers owed the minimum wage and holiday pay, and in Great Britain the tips law covers every tip your workers receive, card tips included.Read the lesson
- Filling the book from Instagram, reviews and rebooking without breaking the advertising rulesRebooking, reviews and social portfolios fill a salon's diary, and each comes with its own rules on photos, influencers, reviews and prescription medicines.Read the lesson
- A client has reacted, been burned or had a filler complication: what do I do today?The first hours after a reaction, burn or injectable complication decide the client's outcome and whether your insurance responds, so act in the right order and admit nothing.Read the lesson
Open the interactive lesson · Every beauty, hair and aesthetics lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- VAT Notice 733 sections 4.4 and 4.6 to 4.8 (VAT schemes, vouchers, courses and deposits)
- VATA 1994 Sch 10A (VAT schemes, vouchers, courses and deposits)
- HMRC E24; VAT Notice 700 (VAT schemes, vouchers, courses and deposits)
- VAT Notice 733, limited cost trader goods test (relevant goods) (VAT schemes, vouchers, courses and deposits)
- VATSC05825, retained hotel deposits for no-shows remain consideration and VAT is due when taken (VAT schemes, vouchers, courses and deposits)
- rates and thresholds 2026 to 2027 (Worked examples in pounds)
- BRIL 5/2025 para 3 (Worked examples in pounds)
- London Local Authorities Act 1991 Part II (Numbers and operations hard cases)