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What the increased minimum and living wage means for your salon | NHBF

April 14, 2022

National Minimum and Living Wage set to increase this month.

The changes to the National Living and Minimum wage were revealed by the Treasury on 25 October 2021 and were officially announced by the Chancellor Rishi Sunak during his autumn budget statement on 27 October 2021. In the Budget, he announced the increases in the NMW (National Minimum Wage) and NLW (National Living Wage) from April 2022.

The NLW will increase to £9.50 from £8.91, and the NMW will also increase across the various age groups. Apprenticeship pay will go up from £4.30 to £4.81. But don’t be caught out: an apprentice over the age of 19 who is in the second year of their apprenticeship must be paid the age-appropriate NMW/NLW.

In September 2021, the Government announced plans to introduce a health and social care levy of 1.25 percentage points to be added to UK workers’ National Insurance contributions from April 2022. A rise in National Insurance Contributions (NIC) is to help pay for the NHS and social care reform. Your National Insurance contributions depend on your employment status and how much you earn.

Not everybody has to pay National Insurance, but contributions count towards your state pension and other benefits.

Employers should update their payroll to ensure that the NMW/NLW increases from 1 April 2022 are taken into account, including the NIC increase. The pay increase should also be confirmed in writing.

If you have an employer, you’ll pay Class 1 National Insurance Contributions. This also includes if you’re self-employed but work for an employer – it’s your employer’s job to pay your National Insurance through your payslips, as well as their own employer contributions of 13.8% (15.05%from April 2022).

Price increase

The only way to make money in your salon or barbershop is by charging enough to cover all your costs and make a profit. Salon and barbershop owners should consider increasing their prices to cover the increase in wages in their business.

You’ll need to calculate how much you’re paying out, for example, wages, stock, rent, rates, utility bills, and accountancy/banking costs. Are you just breaking even or only making a tiny profit? If so, you need to increase your prices.

If possible, it’s a good idea to increase your prices at the start of each new financial year in April. This will make sense to clients and be more acceptable to them. Always give at least six weeks’ notice that your prices will be increasing – don’t spring it on your clients.

Make sure all your staff will be able to explain the reasons for the price increases. For example, suppliers’ higher costs and increases in wages, rent and rates.

The National Hair & Beauty Federation (NHBF) is the UK’s largest trade body for businesses working in the hair, beauty and barbering industries. As part of its work, it provides specialist business support, advice and backup to nail and beauty salons.