- Jane
Feeling the VAT Squeeze in Your Beauty Business? Read This!
VAT Registration for Beauty Businesses: How to Make It Work for You
If you’re a beauty business owner or salon professional approaching the VAT registration threshold, you may feel like you’ve hit a financial roadblock.
Crossing that £90,000 turnover line can feel like a sucker punch; especially when you’re not quite doubling it and the thought of handing over 20% to HMRC feels overwhelming.
So, how do you handle VAT in a service-based business without losing clients, your profit margin, or your sanity?
In this article, we’ll explore how to manage VAT in your beauty business, strategic pricing tips, and how embracing a growth mindset can turn this challenge into your next level of success.
The VAT Dilemma: Raise prices or absorb the cost?
Many salon owners and beauty professionals wrestle with this question: “Should I raise my prices by 20% or absorb the VAT cost myself?”
Raising prices by 20% may feel like a big leap; especially in today’s economy, where clients are also feeling financial pressure.
But absorbing VAT yourself? That can quickly eat away at your profit margin, leaving you working harder for less.
Here’s a mindset shift that changed everything for me:
That 20%? It was never mine to begin with. It belongs to the taxman.
It’s not lost profit, it’s simply part of doing business at a higher level.
VAT is a tax your business collects on behalf of the government.
Clients are already used to paying VAT on products and services elsewhere; this isn’t something new to them.
Often, it’s business owners who feel the pinch more than clients do.
Scaling your beauty business with VAT in mind
VAT registration doesn’t have to be a penalty - it can be a sign that your business is growing and thriving.
The key is to make VAT work for you by getting smarter with your business strategy.
Here’s how to soften the impact of VAT and scale effectively:
- Strategic Pricing: Re-evaluate your prices to reflect your value, not just your time. Introduce high-value services that clients love and are happy to invest in.
- Boost Client Spend: Offer packages, memberships, or retail upsells to increase average spend without overloading your schedule.
- Expense Management: Track your business expenses efficiently. Some VAT-registered costs can be claimed back, reducing your overall liability.
- Work Smarter, Not Harder: Focus on quality clients and high-profit treatments, rather than filling your diary with low-margin services.
Should You Scale Up or Stay Lean?
Not every beauty business chooses to scale after VAT registration.
Some owners intentionally stay under the threshold by working fewer hours, streamlining their services, and focusing on profitability over volume.
There’s no one-size-fits-all approach.
It’s about what works for your lifestyle, goals, and values.
The Bottom Line: Own Your Growth
Stepping into a VAT mindset is about owning your business growth.
It’s a signal that you’re running a serious, professional, and sustainable operation.
VAT isn’t a punishment; it’s a milestone.
Need Support Navigating VAT and Business Growth?
In the Thriving Beauty Business Club (TBBC), we help beauty professionals navigate real challenges like VAT, pricing, client retention, and scaling—without burning out.
You’ll gain access to expert advice, resources, and a supportive community to help you grow your beauty business with confidence.
Ready to stop guessing and start thriving?
