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Hairdressers: We should get bigger VAT cut

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(Drafted from This is Money)

Trade bodies have called on the Government to rethink how it taxes small labour-intensive businesses in the wake of the rise in VAT to 20%.

The National Hairdressers’ Federation, which represents 7,000 salons, has argued that the rise, and the way VAT is structured, puts businesses whose main cost is staff wages and labour at a disadvantage.

In a report to be published tomorrow it calls on the Government to scrap the single rate levied on goods and services in favour of a variable levy, with labour-intensive businesses and sole traders paying 10%.

It also wants a reduction in the registration threshold from turnover of £70,000 down to £40,000.

It believes this will prompt more small businesses to become VAT-registered and reduce the ‘cash-in-hand’ grey economy.

Federation president Mark Coray, 42, who runs Cardiff hairdressing salon Coray & Co, says: ‘It is about levelling the playing field and having a system that responds better to the needs of individual businesses rather than a one-size-fits-all approach.’

Nineteen construction bodies, including the Builders Merchants Federation and the Association of Plumbing and Heating Contractors, have formed a Cut the VAT Coalition to press for similar changes.

But organisations such as the Federation of Small Businesses have argued for precisely the opposite approach.

In December, it calculated that as many as 35,000 additional jobs could be created if the VAT registration threshold was increased from £70,000 to £90,000 turnover.

For professional beauty, hair and styling call Hairdressers Manchester on 0161 950 9933 or visit the website via www.revoil.co.uk – professional hair and beauty salon in Manchester.


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