Tax deduction in the hair and beauty industry

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When filling your self-assessment tax return don’t forget about all the costs you bore regarding your business. If you record them properly and keep all the proofs (e.g. receipts), you will be able to minimise the tax you owe by writing off these expenses.

Check what exactly you can claim as deductions.

Allowable expenses include:

Business-related outgoings (legal, financial, workplace)

  • Accountancy and legal fees,
  • bank and credit card charges*,
  • interest on loans and hire purchase,
  • lease payments,
  • rent, rates, insurance**,
  • phone bills (landline, mobile), Internet bills,
  • postage,
  • chair fee (if you’re booth renter)***
  • salon software (like a Versum).

*Note: You can claim up to £500 in interest and bank charges.

**Note: When working from home, you can deduct the costs of heating, lighting or water proportionate to the total amount used in the household.

If you have an agreement with the salon owner from whom you rent a chair stating that your chair fee includes a percentage from your takings, then your cost to deduct from tax may vary
(and your income too).

Marketing and advertising* (online and offline)

  • Advertising (e.g.newspapers, magazines, Facebook, Google),
  • mailshots,
  • website (hosting, domain name registration, maintenance).

*Note: If you’re self-employed entertaining clients and event hospitality cannot be claimed as an allowable expense.

Professional expenses

  • Membership of industry bodies (like NHF) fee,
  • industry magazines subscription,
  • insurance (e.g. additional health insurance due to work with hazardous chemicals and sharp equipment),
  • training (must be directly connected with your work; the cost of training can also include travel and accommodation for the time of training).

Uniforms

  • branded clothing*,
  • uniforms cleaning**.

*Note: You cannot claim your ordinary, everyday clothes (even if you do not have a special uniform and work in your ordinary clothes).

**Note: HMRC recommends using the nationally agreed flat rate of £60 if you are unable to calculate the exact amount easily. 

Travel and car costs*

  • Fuel,
  • repairs & maintenance,
  • road tax, insurance & MOT,
  • cleaning,
  • parking & tolls.

*Note: As a mobile specialist, you will probably use your car to travel to your clients. In this case, you can deduct the costs of your travels from your profits accordingly to HMRC’s Fixed Scale Mileage Rate which is currently 45p per mile for the first 10,000 miles and 25p thereafter (and includes a depreciation allowance). To claim this cost as a deduction you have to note down the business trips mileages.

You can’t claim tax deductions on mileage when you travel from home to your workplace, but you might be able to claim it on journeys to a temporary workplace (e.g. when you’re going to your client’s home or an industry exhibition).

The other costs included in your business travel that you can claim as deductions are: public transport, overnight accommodation, food, drink, parking fees and so on.

Capital allowances

You can get tax relief (tax deduction) for some stuff you buy to use it in your business. This also applies to assets you have possessed before starting the business.
For more details check the government site.

 Staff costs

  • Salaries, benefits and bonuses,
  • agency fees,
  • sub-contractor fees,
  • employer’s National Insurance.

Products and equipment (incl. repairs)

  • Ongoing products use for treatments and services,
  • retail products,
  • consumable equipment,
  • furniture.

Note: You can use e.g. a car or a phone for both private and business purpose/use, but allowable expenses regard only these related to your business. 

Always make sure that you receive receipts for all the allowable things and services you buy regarding your business. It’s important because HMRC may ask you for proofs of expenses that you are claiming.
You are bound to record these kinds of proofs for 6 years.

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