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| April 23, 2019

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NHF/NBF: Business rates put financial pressure on salons

NHF/NBF: Business rates put financial pressure on salons
Sam Robinson

According to a recent survey by the NHF/NBF, around two thirds of hair salons, beauty salons and barbershops don’t pay business rates at all because they qualify for small business rates relief. But the changes in valuations every three years and the fact that reliefs are often short-term and piecemeal, means that even the smallest salons cannot always rely on remaining exempt from business rates.

Larger Salons

Larger salons are more likely to pay business rates, which are becoming an increasing financial burden. Almost half (42%) reported that their business rates had gone up when they were last revalued in April 2017, although 13% had seen their rates go down.

Common Frustrations

  • The difficulty of using the Check, Challenge, Appeal system. Nearly a third (28%) had tried to challenge their business rates and found the system so difficult to use that it put them off altogether. One salon ended up being taken to court because they could not get an accurate bill. The court found in their favour.
  • Being penalised for opening a second salon by immediately losing all business rate reliefs.
  • Being penalised for improving their premises if that leads to higher valuations and therefore higher business rates. Around one fifth of salons surveyed had improved their premises, ranging from a complete refurbishment through to more minor changes such as air conditioning. Half said that the knowledge that making improvements could lead to higher rates bills would put them off from investing in their premises.
  • Inconsistency between local authorities in implementing the discounts of up to one third for businesses with a rateable value of £51,000 or less in 2019-2020 and 2020-21. 41% of salons surveyed did not know that this relief was available to them, or whether they had to apply for it or whether it would be automatically applied by their local authority.

Online VS Brick And Mortar

The knowledge that online businesses and out of town distribution centres which supply goods bought online by customers pay so little in business rates, is also a continuing source of frustration. The government’s Communities and Local Government Select Committee report published last month highlighted that Amazon contributes less than 1% of its turnover in business rates, whereas ‘bricks and mortar’ premises contribute anything from 2% to 7% of their turnover in business rates.

Unfair Burden

Hilary Hall, chief executive of the NHF/NBF said, “We used the survey findings to respond to a Treasury Committee Review of business rates. We called for permanent and long-term business rates reliefs for small businesses to help them plan, with more consistency between local authorities about how reliefs are implemented. We also called for more time for salon owners to recoup their investment in premises or expanding their business with a second set of premises to encourage growth, and an easier system for challenging business rates bills. And, of course, there needs to be a long-term solution to the unfair burden that business rates put on ‘bricks and mortar’ premises compared to online or out of town businesses.”

For further info, you can visit NHF here.