What Are Expenses?
Expenses refer to anything you spend money on that has to do with running your business. As a beautician or hairdresser, this could be anything from shampoo and conditioner, to further training to keep up with industry standards.
As such, any of these things you spend money on can be claimed back which, in turn, can minimise your tax bill.
Expenses of a Self-Employed Hairdresser/ Beautician
There are plenty of expenses you could be racking up as a hairdresser or beautician..
As such, you need to make sure you know what you can and cannot write off against your income when the time comes to complete your tax return.
While this may seem like a drag now, accurately claiming for your expenses could save you hundreds of pounds a year!
Some of the key tax deductions you could claim include, but are not limited to:
Materials and equipment
Chair fees are likely to be one of the biggest expenses that a self-employed beautician or hairdresser will face.
As more beauticians/ hairdressers go self-employed, the need for salons to find stylists and hairdressers to find clients increases. That’s why it’s very common for people to rent a chair at a salon where they’ll then work rather than being employed by the salon manager directly.
This has plenty of benefits for the hairdressers, including:
Flexibility with working hours.
No commitment to renting or buying premises.
Meeting clients in a central and consistent location.
However, renting chairs can be expensive and if you’re not claiming back the cost, then you could be spending a fortune each year unnecessarily.
How you pay for your chair fees (daily, weekly, monthly, etc.) may vary depending on the salon and the owner, so make sure you keep an accurate record of how much you’re paying so you can claim these fees as expenses.
If you’re self-employed and you’re not working out of your own home, then chances are you need to travel to get to work. As such, there are certain travel expenses that you could claim against your tax bill.
However, you need to be sure that you are only including travel that is taken for work purposes as an expense. This could include:
Getting to and from a place of work.
Travelling to training events.
Travelling to the bank to deposit takings.
If you’re travelling by car, then you need to make a note of how many miles you’ve travelled. Rather than sitting down and working out fuel costs, wear and tear and insurance individually, you can claim back a set amount per mile as follows:
45 pence per mile for the first 10,000 travelled in a year.
25 pence per additional mile travelled over the initial 10,000.
If you’re using a motorcycle, then you can claim 24 pence per mile for the total mileage over the year.
With travel expenses, you can also claim for things like tolls and parking fees, but you cannot claim for any parking or speeding fines you incur during your travel for work.
Try and get into the habit of making a note of how many miles you’ve travelled and any fuel receipts. If you’re using public transport, then make sure you keep ahold of any tickets purchased. While they’re not necessary to complete your tax form, you may still be asked to produce them.
Materials and Equipment:
It doesn't matter what your profession, it’s essential that you have the right tools.
The materials and equipment you use as a beautician/hairdresser can also be included as expenses on your tax return assuming you were the one who paid for them. These expenses include, but are not limited to:
Shampoo, conditioner, etc.
Hairstyling appliances (hairdryer, straighteners, etc.)
Styling products/ beauty treatment products:
If you’re paying to repair, replace or upgrade one of these items, then the cost of that can be included on your tax return as well.
Make sure you keep a hold of all receipts from any materials and equipment purchases both for your tax return, and for consideration when setting your prices.
Whether you’re supplying the uniform you wear in the salon or you’re buying protective clothing like aprons and gloves, clothing can also count as a business expense.
You can even claim back the cost of laundering any work-related clothing, but working the costs out can prove to be very complicated. That’s why HMRC recommends using the nationally agreed flat rate of £60.
Please note, you cannot claim back any clothes you wear underneath your uniform or those you wear when a uniform isn’t required.
Much like any other business, you’re bound to be using some utilities as a self-employed beautician/ hairdresser. Assuming you only include what you’ve used for work purposes, these costs can also be claimed back.
Utilities you can claim back include:
A phone that’s used for business purposes.
Internet that’s used for business purposes.
Heating, lighting and water if you’re working out of your home.
Please note, you won’t be able to claim back all of your utility costs, only those that are used while you’re working. For example, if you use your phone for work a third of the time, then you can claim back a third of the bill.
When it comes to claiming utilities, you may need to scrutinise your bills to work out accurately what you’ve used, but once it’s done you should be able to reuse the calculation each year so long as your circumstances remain the same.
While not compulsory, it’s highly recommended that you’re insured to keep you and your client protected should something go wrong. The costs of insurance can then be claimed back against your tax bill.
Also not compulsory, but having a space online where you can market yourself and your business is extremely beneficial. If you have a website displaying your work, then you can deduct the cost of running it against your income.
You can also deduct any paid advertising online used for your business, such as paid social media posts as well as offline advertising like an ad in a local paper. If it costs money and it’s promoting your business, you should be able to claim it as an expense.
As we stated above, any training you undertake to keep your skills up to industry standards can be claimed as a business expense. Be it evening classes or online courses, so long as it’s related to the running of your business, it can be deducted.
Any travel expenses or accommodation costs relating to training courses may also be deducted, so make sure you keep the receipts for everything!
Bookkeeper/ Accountant fees:
If you’ve found all of this information about tax returns and expenses a bit overwhelming, then don’t worry! You’re certainly not alone.
A lot of self-employed professionals (including beauticians or hairdressers) decide to use an accountant or bookkeeper, to help manage their business finances. And since they’re used for the business, the cost of their services can be deducted as well.
Bookkeepers & accountants can also advise on how to reduce tax bills, long term or how to maximise your profits.
When you’re self-employed, it’s essential that you put aside a proportion of your income to cover tax and National Insurance bills. But that doesn’t mean you have to spend a fortune!
Just make sure you’re keeping accurate records of any business expenses and include all of these details on your Self Assessment Tax Return and you can work to keep your tax bill as low as possible.