How the Autumn Budget Could Impact the UK Beauty Industry: BABTAC Responds

The UK beauty industry continues to demonstrate its economic strength, contributing £30.4 billion to the UK economy in 2024. Following the recent Autumn Budget announcement, industry professionals are assessing how the newly introduced measures may influence beauty businesses, practitioners, and the clients they support.

To provide clarity on these changes, Lesley Blair MBE, CEO and Chair of the British Association of Beauty Therapy and Cosmetology (BABTAC), has shared expert insight into the potential challenges facing the sector.

Key Budget Measures Affecting the Beauty Sector

Several Budget decisions carry significant financial implications for salon owners, clinic operators, and self-employed professionals. The most relevant measures include:

• Income tax thresholds frozen until the end of the 2030/31 financial year

• National Insurance and income tax thresholds remaining frozen

• Salary-sacrificed pension contributions to become taxable

• Inflation forecast increased by the OBR (3.5% vs 3.2%)

• Minimum wage to rise to £12.71 per hour for over-21s from April 2026

• A 2% increase in dividend taxation

With many beauty businesses already navigating tight margins, BABTAC warns that rising costs are likely to cascade throughout the sector, affecting employers, employees, and customers.

BABTAC’s Response: A Growing Cost Burden for Beauty Businesses

Lesley Blair MBE, BABTAC & CIBTAC CEO and Chair, and previous advisor to HM Treasury on behalf of the beauty industry, comments:

“For small businesses continuing to navigate the current financial climate, the decision to freeze income-tax thresholds until the end of 2030/31 offers some certainty for planning and forecasting. However, the freeze on National Insurance thresholds will effectively increase employer contributions as wages rise with inflation, adding further pressure on already tight margins.

Several other measures announced in the Budget are likely to place additional strain on both employers and employees. The move to tax salary-sacrificed pension contributions removes a valuable incentive for staff savings and adds another cost consideration for employers. With the OBR forecasting inflation to rise higher than expected, beauty businesses may feel the squeeze on operating costs, while customers themselves face shrinking disposable income.

The scheduled increase in minimum wage to £12.71 for over-21s from April 2026, although positive for workers, will significantly raise wage bills in a labour-intensive sector. Coupled with a 2% rise in tax on dividends, a change that will particularly affect owner-operators who pay themselves this way, the cumulative impact could challenge the commercial viability of many small salons, potentially leading to price increases or reduced staffing.”

Her analysis reflects the multifaceted pressures facing beauty businesses as operational costs rise while consumer budgets tighten.

Why the Beauty Industry Matters^[1]

Research highlights the sector’s substantial contribution to the UK economy:

• £30.4bn GDP contribution (2024) – up 9% year on year

• £32.4bn spent by UK consumers on personal care in 2024

• 496,000 direct jobs, rising to nearly 700,000 including the wider footprint

• £8.6bn in tax revenue in 2024, projected to rise to £9.4bn in 2025

Not only is the sector outperforming general UK GDP growth, but it also supports hundreds of thousands of livelihoods across the country.

^{Reference:
[1] Research conducted by Oxford Economics, British Beauty Council’s Value of Beauty Report 2024-25}