Tax Guide for Self-Employed Barbers

The COVID-19 pandemic was a challenging time for traditional barber shops. Periodic lockdowns and tough restrictions led to long periods with sporadic or no income. Many clients also discovered that they preferred to have their hair or beard trimmed at home, rather than going to a salon. It’s no wonder that so many skilled barbers are now choosing to work flexibly on a freelance basis.

And freelance life can be great. You can set your own hours, develop your own signature brand, and cultivate your own loyal base of customers. But being your own boss also means taking on extra responsibilities. We’ll take a look at some of the key concerns for self-employed barbers in this post.

Tax and National Insurance

If you’re an employee, you rarely have to deal with HMRC. Your employer is responsible for paying tax and National Insurance from your wages before the rest is paid to you. As a freelancer, however, it’s your job to declare your income and pay any tax & NI that is due. If you overrun a deadline or fail to declare any earnings, then you will bear the brunt of the resulting (and potentially heavy) fines and penalties. You’ll also need to keep your invoices and any receipts for 22 months after submitting your tax return.

If you decide to go self-employed, the good news is that you won’t need to submit a tax return in your first year of business. But you will have to pay that tax eventually, so make sure to put money aside as you go. By 5 October of the second year, you must register for self-assessment and Class 2 National Insurance. 

You’ll submit your first tax return by the following 31 January. This is when you will pay the tax due for the previous year. You will then make a second payment on account for the current tax year, calculated on the basis of your first year’s earnings. The deadline for this is 31 July.

Over and underpayment

After your first tax return, you’ll continue to pay tax twice a year. The amount due will be adjusted depending on your last tax return, so you may find that you overpay or underpay as your income fluctuates. You’ll either have to pay extra to make up the shortfall, or, if you’ve paid too much, you’ll be due a refund from HMRC. You’ll often need to apply for this yourself, so you should be proactive about monitoring your income and taxes or have someone do this for you. This is just one way a good accountant can save you time, effort and money.

Expenses are another area where expert advice can pay off. The tools of your trade, such as razors and clippers, shampoos and treatments, training, specialist clothing, and the cost of running your premises or mobile business can all be claimed against tax. But there are other, less obvious outgoings that also count, such as marketing costs, subscriptions to trade publications, and hiring an accountant.

If you’re a barber who is thinking about self-employment, our friendly online accountants are here for you! Just get in touch for a free, personalised, no-obligation quote.