Preparing for Tax Returns: A Guide To Expenses For Bookkeeping For Hairdressers
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Tax Returns For Hairdressers Salon Management HMRC Hairdressers

Running your own hair business is amazing; you get to be your own boss, set your own hours, and do what you love every day.

But when tax season rolls around, it can feel a bit overwhelming (and way less fun than creating the perfect balayage on your clients).

If you're a self-employed hairdresser or salon owner in the UK, sorting out your taxes is just part of the game.

Here, we will be breaking down everything you need to know, from how to pay your taxes and what documents to keep to claiming expenses like salon supplies, content creation, and booking systems.

Let’s make tax season as painless as possible so you can focus on doing what you do best: making your clients look and feel fabulous!

How Do You Pay Your Taxes As A Hairdresser?

First things first, if you're earning more than £1,000 from your hairdressing, you're required to file a Self Assessment tax return. This means you'll report your income and expenses to HM Revenue and Customs (HMRC).

The tax year runs from 6 April to 5 April the following year, and the deadline for online submissions is 31 January.

So, for the tax year ending 5 April 2025, you'll need to file by 31 January 2026.

How to set up an HMRC account as a hairdresser

Setting up an HMRC (HM Revenue and Customs) account as a hairdresser depends on whether you are self-employed, employed, or running a limited company.

If You’re Self-Employed (Sole Trader)

  1. Register for Self-Assessment & Class 2 National Insurance
    • Go to the HMRC website.
    • Select "Register for Self Assessment."
    • Provide personal details, including your National Insurance number.
    • You’ll receive a Unique Taxpayer Reference (UTR) by post within 10 days.
  2. Set Up a Government Gateway Account
    • If you don’t have one, create an account on Government Gateway.
    • This allows you to file your tax returns online.
  3. Register for VAT (If Required)
    • You only need to register if your turnover exceeds £85,000 per year.
    • You can voluntarily register if you want to reclaim VAT on business expenses.

If You’re Setting Up a Limited Company

  1. Register Your Business with Companies House
    • Go to Companies House.
    • Choose a business name and register online (£12 fee).
  2. Register for Corporation Tax
    • After registering with Companies House, you must sign up for Corporation Tax on the HMRC website.
  3. Set Up Payroll (If You Have Employees)
    • Register as an employer with HMRC if you plan to hire staff.
    • Use PAYE (Pay As You Earn) to handle wages and tax deductions.

What Documents Do You Need for HMRC As A Hairdresser?

It's easier said than done, but staying organised is key as you don't want to get tripped up, especially when it comes to HMRC.

Here's a checklist of documents that'll make your life easier...

Income Records: Keep track of all payments received from clients. Invoices, receipts, and bank statements are your best friends here.

Expense Receipts: Hold onto receipts for any business-related purchases. This includes everything from hair products to travel costs.

Bank Statements: These help verify your income and expenses.

Mileage Log: If you're a mobile hairdresser, record your business travel miles.

Previous Tax Returns: Useful for reference and consistency.

Where Can You Pay Your Taxes As A Hairdresser?

Paying your tax bill is straightforward. If you don't have a dedicated accountant supporting you with this, you can pay your tax in the following ways.

Online: Through your HMRC online account.

Bank Transfer: Using HMRC's bank details.

Direct Debit: Set this up in advance to ensure timely payments.

At Your Bank or Building Society: If you prefer in-person transactions.

How Much Do You Owe?

The amount of tax you owe depends on your taxable profit, which is your total income minus allowable expenses.

For the 2024/25 tax year, the personal allowance is £12,570.

Earnings above this are taxed at the basic rate of 20%, up to £50,270. Beyond that, higher rates apply.

Don't forget about National Insurance contributions, which are also due on your profits.

Claiming Expenses

To reduce your taxable income, make sure to claim all allowable expenses.

Common ones for hairdressers include:

    • Hair Products and Equipment: Shampoos, conditioners, scissors, hairdryers, etc.
    • Chair Fees: If you rent a chair in a salon.
    • Uniforms: Branded clothing or protective gear.
    • Travel Expenses: Costs of traveling to clients or suppliers.
    • Marketing and Advertising: Website costs, business cards, social media promotions.
    • Training Courses: To keep your skills sharp.
    • Insurance: Public liability or professional indemnity insurance.
    • Utilities: A portion of your home bills if you have a home office.

Remember, these expenses must be wholly and exclusively for your business.

Investing in Your Business

To stay ahead in the competitive world of hairdressing, consider investing in:

      • Content Creation: Organise content days to showcase your work on social media.
      • Camera Equipment and Lighting: High-quality photos can attract more clients.
      • Booking Systems: Streamline appointments with online booking software.

These investments not only enhance your business but can also be claimed as expenses!

Managing your bookkeeping As A Hairdresser

Managing accounting, bookkeeping, and tax returns is crucial for mobile hairdressers and salon owners to ensure financial health and compliance.

1. Keep Business & Personal Finances Separate

  • Open a dedicated business bank account.
  • Use a business credit/debit card to track expenses easily.

2. Track All Income & Expenses

  • Record every sale, tip, and additional service fee.
  • Keep track of business expenses (e.g., products, fuel, rent for salon space).

3. Use Accounting Software

  • QuickBooks, Xero, or some salon software systems can automate invoicing, expenses, and tax calculations.
  • Cloud-based tools help track finances on the go.

4. Keep Digital & Physical Receipts

  • Use receipt scanning apps (like Expensify or Dext) to store copies.
  • Store receipts for at least 5-7 years in case of audits.

5. Understand Your Tax Deductions

Don't forget you can claim expenses such as:

✅ Hair products & tools (scissors, combs, dryers)
✅ Travel expenses (fuel, parking, mileage for home visits)
✅ Salon rent & utilities
✅ Business Insurance
✅ Marketing costs (website, social media ads)

6. Set Aside Tax Money Regularly

  • Save 20-30% of income for taxes to avoid last-minute stress.
  • Pay quarterly tax estimates if required to prevent penalties.

7. Register for VAT (If Necessary)

  • If your turnover exceeds the VAT threshold (£90,000 in the UK for 2024), register for VAT.
  • You may benefit from the Flat Rate VAT Scheme to simplify payments.

8. Know Your Legal Structure

  • Sole trader: Simple but personal liability for debts.
  • Limited company: More paperwork but tax-efficient and offers liability protection.

9. Invoice & Get Paid Promptly

  • Use digital payments (SumUp, Stripe, Square) for quick transactions.

10. Hire an Accountant (If Needed)

  • A tax expert can help maximise deductions and ensure compliance.
  • Even using an accountant for an annual tax return can save money in the long term.

Final Thoughts

Handling taxes might not be the most glamorous part of the profession, but with proper organisation and knowledge, it doesn't have to be stressful. Keep accurate records, stay on top of deadlines, and don't hesitate to seek professional advice if needed.

 

Here's to a successful and financially savvy year ahead!

If you are ever unsure about your tax liability, always speak to a registered professional accountant.

 

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