Hair and Beauty Sector Disguised Employment Practices 2023-05-09
2023-05-09
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Response quality
Questions & Answers
Q1
Partial Answer
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Context
Concerns about employment practices in the hairdressing industry where many operate under a self-employed model to avoid PAYE, national insurance, and VAT. 70% of the hairdressing industry is estimated to be operating under this model which could amount to disguised employment according to HMRC guidelines.
What assessment has been made of the potential impact of disguised employment practices in the hair and beauty sector on tax revenues? The rented chair model allows businesses to avoid PAYE, national insurance, and VAT. This affects apprenticeships as 90% of hairdressers learn through apprenticeships which require proper payment.
The Government recognise the role of hairdressing salons in training apprenticeships. Funding for employer-led apprenticeships will grow to £2.7 billion in 024-25, helping pay for the cost of training and assessment. Strict criteria exist for employment status.
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Assessment & feedback
The Minister did not directly address how VAT rates could be tapered or enforcement of disguised employment rules would become stricter as requested.
Is Not Their Choice; There Are Very Strict Criteria
Response accuracy
Q2
Partial Answer
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Context
The hairdressing industry is estimated to have 70% of its workforce operating under a self-employed model, often as a way to avoid PAYE, national insurance, and VAT. This model may amount to disguised employment according to HMRC guidelines.
Estimates suggest that 70% of the hairdressing industry is currently using a self-employed model to avoid paying pay-as-you-earn tax, national insurance, and VAT. According to HMRC guidelines, these salons might be engaging in disguised employment practices. Since 90% of hairdressers are trained through apprenticeships which require proper payment, how can we ensure that future hairdressers receive appropriate training?
We recognise the role of hairdressing salons in apprenticeship training. Funding for employer-led apprenticeships will grow to £2.7 billion by 2024-25, aiding costs associated with training and assessment. Strict employment rules must be followed.
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Assessment & feedback
The Minister did not address the specific ask about tapering VAT rates or enforcing disguised employment rules more stringently as requested.
It Is Not Their Choice; There Are Very Strict Criteria
Response accuracy
Q3
Partial Answer
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Context
The hair and beauty industry has a high percentage of female entrepreneurs and young people. However, this workforce is at risk due to disguised employment practices that may be affecting their financial stability.
With many women and young people involved in entrepreneurship within the hair and beauty sector, there's a significant risk from disguised employment. How are Ministers ensuring self-employed individuals understand their tax obligations so these groups can continue to thrive?
We provide guidance for customers to help them understand employment status, and we have agreed guidelines specifically with the National Federation of Hairdressers.
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Assessment & feedback
The Minister did not specify concrete steps or timeline on how self-employed individuals would be made aware of their tax obligations as requested.
Wonderful That We Have So Many Women Setting Up
Response accuracy