Running a beauty business like a salon, nail bar, or hair studio is no easy feat. Between keeping your clients happy and managing day-to-day operations, taxes might feel like one more headache.

But here’s the deal—understanding and staying on top of your taxes can save you from costly mistakes that could seriously hurt your bottom line.

Whether it’s income tax, VAT, or business mileage, managing taxes isn’t just something you have to do, it’s something you should do to keep your business thriving.

Tax Basics for Beauty Businesses (Without the Jargon!)

If you’re running a beauty business in the UK, you’re dealing with several types of taxes. Here’s a simple breakdown:

• Income Tax – If you're a sole trader or in a partnership, this tax hits your profits. That’s why keeping an eye on how much you’re making matters.

• VAT (Value Added Tax) – Once you’re making over £90,000 in turnover, you’re required to charge VAT at 20%.

• National Insurance Contributions – These can quickly add up, so it’s important to factor them into your overall tax picture.

• Business Rates – If you have a physical location, like a salon, you’re paying a tax on the property’s "rateable value." It can be a hefty ongoing cost for many beauty businesses.

• Business Mileage – If you or your team are constantly on the go for work, like visiting clients, you can actually claim tax deductions on your mileage—only if you track it right!

Why Beauty Businesses Must Nail Their Tax Management

Look, taxes aren’t just about ticking boxes for HMRC—they can make or break your business. Small beauty businesses are especially vulnerable. A single tax mistake can hit your cash flow hard, and for many, that could be the difference between staying open or not.

Almost 30% of small businesses in the UK face serious cash flow problems, and poor tax management is one of the biggest culprits. It’s one of those hidden challenges that many salon owners don't realise until it’s too late.

Avoid These Common Tax Traps

Running a beauty business means you’re probably juggling a million things at once, and taxes can sometimes fall to the bottom of your to-do list. But some mistakes are just too costly to ignore:

• Income Tax Oversight – Not fully understanding how your earnings impact your tax liabilities could lead to an unexpected bill that sends your cash flow into a tailspin.

• Mileage Tracking Fail – If you’re a mobile beauty pro, like a traveling nail technician, every mile counts. Don’t miss out on tax deductions just because you didn’t keep track of your trips.

• VAT Blunders – Whether it’s registering too late or miscalculating your VAT return, messing up on VAT can cost you big in penalties.

The Financial Pain of Tax Mistakes

Ever missed a deadline with HMRC? You know how brutal the fines can be. For instance, missing a self-assessment deadline results in a £100 fine right off the bat, and the fees just keep piling on. Suddenly, what seemed like a minor error is now threatening your entire business.

And it’s not just fines. Bad tax management can wreck your cash flow. If you haven’t been saving regularly for taxes, you could end up scrambling for cash when the bill comes due. Even worse, poor tax practices can hurt your reputation—clients might start wondering about your professionalism if you’re constantly in a financial mess.

How to Manage Income Tax (Like a Pro)

For beauty businesses like yours, the income tax rates for the 2024/25 tax year are:

• 20% on income up to £50,270 (Basic rate)

• 40% on income between £50,271 and £125,140 (Higher rate)

• 45% on anything over £125,140 (Additional rate)

It's important to note that in Scotland, income tax bands are different, and the rates you've mentioned apply to the rest of the UK (England, Wales, and Northern Ireland)

To stay ahead, it’s key to keep a clear record of every penny you earn and all the expenses you can claim against your taxable income. This will help minimize your tax bill and avoid any nasty surprises when tax season rolls around.

Don’t Miss Out on Business Mileage Deductions

Mobile beauty services? Your business mileage is a hidden goldmine of tax savings. The UK allows you to claim 45p per mile for the first 10,000 miles and 25p per mile after that. But here's the catch—you need to have solid records of your trips. Without them, you could be throwing away tax deductions.

VAT—When Does It Matter for Your Beauty Biz?

Once your salon is making over £90,000, VAT becomes a big deal. You’ll need to start charging VAT on your services, and trust me, you don’t want to get this wrong. Regularly review your VAT obligations to stay on track, and make sure you're not missing out on VAT you can claim back on purchases for your business.

Business Rates—What You Need to Know

For many beauty businesses, especially those with a salon or physical shop, business rates can be one of the most expensive tax costs. If your property has a rateable value of £20,000, for example, you’re looking at an annual bill of around £10,240. Ouch! The good news? There are reliefs available, like Small Business Rate Relief, that can lighten the load if you qualify.

How Pocket PA Simplifies Your Tax Life

Managing taxes doesn’t have to be a nightmare. With tools like Pocket PA, you can take control of your tax management once and for all. Our Tax Estimator Tool helps you figure out how much to set aside for taxes every month, week, or year, so you’re never caught off guard. Plus, if you’ve got a mobile business, the mileage tracking feature ensures you’re getting every last penny in deductions.

Take this example: if your mobile nail salon makes £3,000 per month, Pocket PA will guide you to set aside £900 (based on a default 30%) so you're always prepared when tax time hits.

Conclusion

Tax management is one of those things that doesn’t feel urgent—until it is. But with the right tools and a bit of planning, you can turn it into a routine part of your business that runs smoothly in the background. And that’s where Pocket PA comes in—helping you keep your financials in check so you can focus on what really matters: growing your beauty business.