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
- Add up what the salon itself supplies.Your own services and retail, plus all chair rent, plus any percentage you take. Test the total against the threshold over a rolling 12 months.
- Check who really supplies the client.Fixed rent and their own prices, hours, clients and card terminal point to the renter. Your till and your rules point to you.
- Take advice before you answer HMRC.Work out the date you should have registered and take it to a chartered tax adviser or VAT specialist first.
This is the largest money risk in UK hair and beauty. If you let chairs or rooms to self-employed stylists and therapists, two questions decide your VAT position, in this order: what does the salon itself supply, and who supplies the haircut or treatment to the client, the salon or the stylist.
Chair rent has been standard-rated since 2012
Since 1 October 2012, letting a chair, space or room with related services to a hairdresser is excluded from the land exemption, so the rent is standard-rated. A beauty or treatment room let with services such as towels, products, reception or booking is usually a standard-rated supply of facilities too. A bare room let for the renter's exclusive occupation can be an exempt licence to occupy land, unless you have opted to tax. Any percentage you take for products, reception, booking or card processing is also your standard-rated supply. As of Oct 2026.
VATA 1994 Sch 9 Group 1 item 1(ma); HMRC VATLP19800 to VATLP19830; HMRC v Denyer [2007] EWHC 2750 (Ch); Holland and Vigdor [2008] EWHC 2621 (Ch); VAT Notice 742
So your taxable turnover is your own services and retail, plus all the rent, plus any percentage you take. It is tested against the £90,000 registration threshold on a rolling 12 months. As of Oct 2026.
Who supplies the client
HMRC looks at what really happens, not what the agreement calls it. If the salon supplies the service, every stylist's takings are its turnover and the VAT is 1/6 of the VAT-inclusive takings. Tribunal outcomes turn on the facts.
The first set of facts points to the salon supplying the service, so the stylists' takings become the salon's turnover. Every salon rule you add moves the arrangement that way.
| Dan's own takings | £70,000 |
| Rent: 5 stylists x £180 a week x 52 | £46,800 |
| His 30% fee for products and reception, on takings of £40,000 each | £60,000 |
| Dan's own taxable supplies, even if every stylist is genuinely self-employed | £176,800 |
| VAT a year at 1/6 | £29,466.67 |
£176,800 / 6Far over the threshold, so he should have registered anyway. If HMRC also shows he supplies the hairdressing (the 30% of takings through his till points that way), turnover is £270,000 and the VAT £45,000 a year. Both are before input tax and penalties. As of Oct 2026.
How far back HMRC can go
Splitting one business into several to stay under the threshold can be directed as one taxable person, from the date of the direction. Assessments normally go back 4 years, but up to 20 years where the loss was deliberate or came from a failure to notify liability to register. A non-deliberate failure to notify carries a penalty of up to 30% of the VAT lost, reducible for disclosure. Prices are treated as VAT-inclusive, so the VAT comes out of takings you have already banked. As of Oct 2026.
VATA 1994 Sch 1 paras 1A and 2; VATA 1994 s.77(1), (4), (4A) and (4C); FA 2008 Sch 41
Once registered: the Flat Rate Scheme
Hairdressing and other beauty treatment services use 13% of VAT-inclusive turnover, or 12% in the first year of registration. A limited cost trader, whose relevant goods including VAT are under 2% of flat-rate turnover, or over 2% but under £1,000 a year (pro-rated for shorter return periods), uses 16.5% (15.5% in the first year). A salon buying back-bar products often passes the goods test, as does an injector buying toxin and filler; a room renter using the salon's products usually does not. Joining needs expected taxable turnover of up to £150,000 excluding VAT. As of Oct 2026.
Aesthetics clinics: injectables, fillers and peels done for appearance are standard-rated even when a nurse or doctor does them. The medical exemption covers only care whose main purpose is health (VATA 1994 Sch 9 Group 7 item 1; PFC Clinic AB, C-91/12). As of Oct 2026.
Before you reply to any HMRC letter about chair rental, work out the date you should have registered and take it to a chartered tax adviser or VAT specialist. Do not send HMRC your own view first.
Asked in Greymill
Your takings: £70,000
Chair rent, which carries VAT: 5 x £180 x 52 = £46,800
Your 30% fee: 5 x £40,000 x 30% = £60,000
Total: £176,800, far over the threshold
VAT at 1/6: £29,466.67 a year (As of Oct 2026)
The bigger risk is your till. HMRC looks at what really happens. Running their takings through it points to you supplying the haircuts. If HMRC shows that, your turnover is £270,000 and the VAT £45,000 a year, both before input tax (VAT you reclaim on costs) and penalties.
If you failed to tell HMRC you had to register, it can go back up to 20 years, not the usual 4 (As of Oct 2026). Your prices count as including VAT, so the VAT comes out of takings already banked.
Before you contact HMRC, take the date you should have registered to a chartered tax adviser or VAT specialist. I can draft your questions for them.
Ask it about your own business
Paste this into Greymill with your own figures, and Tax & Bookkeeping works it through for your business.
I run a salon or beauty business in the UK. I have [number] self-employed stylists or therapists paying [rent] a week, plus [percentage, or none] of their takings for [products, reception, card processing]. My own takings are [amount] a year and I am [VAT-registered or not]. Day to day: [who sets prices, whose till and card terminal, who books clients, who sets hours, whose products]. Work out my taxable turnover on a rolling 12 months, tell me which facts point to me supplying the service, and draft the questions to take to a VAT specialist.
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
- December was busy, so why is there no cash in February?Voucher, course and deposit money is service you still owe, no-shows are column hours you never get back, and a 13-week cash view shows both before they bite.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.
- VATA 1994 Sch. 9 Group 1 item 1(ma); VATLP19810, 1 October 2012 legislative change; VATLP19820, chair, room or space and related services (VAT: chair and room rental and who supplies the service)
- VATLP19820 (what is chair rental); VATA 1994 Sch 9 Group 1 item 1(ma) and its exclusive-use carve-out for hairdressers (VAT: chair and room rental and who supplies the service)
- VATA 1994 Sch 1 para 1; GOV.UK when to register (VAT: chair and room rental and who supplies the service)
- VATA 1994 s. 77(1), (4), (4A) and (4C) (VAT: chair and room rental and who supplies the service)
- FA 2008 Sch 41 paras 6 and 13 (VAT: chair and room rental and who supplies the service)
- 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)
- Autoclenz v Belcher [2011] UKSC 41 (Staffing models and employment status)
- Uber BV v Aslam [2021] UKSC 5; Pimlico Plumbers v Smith [2018] UKSC 29 (Staffing models and employment status)
- Current Home Office code, civil-penalty table: £45,000 per worker for a first breach and £60,000 for a repeat breach within 3 years (Staffing models and employment status)
- Human Medicines Regulations 2012 reg 214 (Non-surgical aesthetics: medicines and prescribing)
- HMR 2012; MHRA classification (Non-surgical aesthetics: medicines and prescribing)
- GMC cosmetic-interventions guidance para. 11: physical examination before prescribing injectable cosmetic medicines (Non-surgical aesthetics: medicines and prescribing)
- HMR 2012 reg 284; CAP Code rule 12.12 (Non-surgical aesthetics: medicines and prescribing)
- CAP Code rules 12.1 and 12.12 (Non-surgical aesthetics: medicines and prescribing)
- HMR 2012 Sch 19 (Non-surgical aesthetics: medicines and prescribing)