Beauty Businesses Face a Cost Crunch in 2026, But Opportunity Awaits
Mark Lumsdon-Taylor · Posted on: January 28th 2026 · read
2026 is going to be a big year for the beauty industry and not all of it will feel glamorous. Salons and cosmetics businesses are staring down rising costs and tax changes that will squeeze margins hard. However, it’s not all doom and gloom. There are some real wins coming too, from fairer import rules to better training options. The question is how do you balance the pain with the positives and come out stronger?
The Tough Stuff
Let’s start with the reality check.
- National Living Wage jumps to £12.71 in April 2026 which is another 4.1% on the wage bill overnight. In beauty, where people are everything, this hits hard.
- Tax thresholds are still frozen, so as wages go up, staff keep less. To stop people leaving, you’ll need to pay even more gross.
- Dividend tax rises by 2% from April 2026 – this is not the best news for limited-company salon owners and self-employed therapists who take dividends.
- Salary-sacrifice pensions capped from 2029 – National Insurance relief limited to £2k. It’s a future cost, but worth planning for now.
- HMRC is tightening its grip on VAT in the beauty sector, with tribunal rulings confirming many aesthetic treatments are standard‑rated—forcing businesses to review VAT treatment or risk higher prices or reduced margins.
The bottom line is that costs are climbing, and profits will feel the pinch.
The Good News
Now for the upside, because there is one.
- Import loophole scrapped There is no more £135 exemption. Every parcel pays VAT and duty like UK businesses do. This is a huge win for British brands and high-street shops.
- Growth and skills levy replaces apprenticeship levy From April 2026, you can spend levy funds on short courses think nails, colour, digital marketing, not just full apprenticeships.
- Training gets a boost Level 2 and 3 courses funded again, and SMEs won’t pay a penny for apprentices under 25.
- Business rates reform Lower permanent rates for retail, hospitality, and leisure properties, which means most salons benefit.
These changes open doors for upskilling, improving service, and strengthening your competitive edge.
What this means for salons
Yes, costs are rising. But the playing field is fairer now that imports pay their share. Training is easier and cheaper, and business rates reform offers some relief. The salons that win will be those that plan ahead - review pricing, invest in skills, and lean into their local advantage.
Takeaway
2026 will be a balancing act: higher wages and taxes on one side, new opportunities on the other. Salons that embrace training, optimise costs, and market their UK-made edge will come out stronger.
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