HMRC has published new guidance to clarify employment status for salons. This is especially relevant for hair and beauty salon owners renting out chairs.
As more salons adopt this business model, the line between employment and self-employment can blur. Understanding HMRC’s criteria is essential to avoid costly mistakes, especially if identified during a compliance check.
Self-Employment Basics
For some businesses, the status is easy to determine. If the salon owner rents out chairs and does not work in the salon themselves, and the chair renters operate independently, the case for self-employment is strong.
However, many salons use a mixed model. A business may include working owners, employees, and chair renters. When a shared brand identity is presented, classification becomes more complex.
To support a self-employed status, chair renters should ideally:
- Use their own business bank accounts and insurance
- Buy their own products and tools
- Maintain their own client list
- Keep individual business records
A shared till or card machine is acceptable if income is clearly separated.
Key Risk Areas
Chair renters should choose their own hours and take time off freely. That said, salons with walk-in clients may require minimum staffing levels. Document any agreements on this point to show mutual decision-making.
Likewise, renters should set their own prices. If the same services are offered across the salon, this can be challenging. Still, exclusive services should have independent pricing, and even where pricing is shared, each renter should display their own list.
The updated HMRC guidance and a link to the Check Employment Status for Tax (CEST) tool are available here.