NATIONAL MINIMUM & Living Wage increase

With both minimum wage rates and National Insurance contributions rising this month, the NHBF shares advice on how to manage the increases

Changes to the National Living and Minimum Wage were revealed by the Treasury on October 25, 2021, and were officially announced by the Chancellor during his autumn budget statement on October 27, 2021.

These changes come into effect in April 2022, when the National Living Wage (NLW) will increase to £9.50 from £8.91, and the National Minimum Wage (NMW) will also increase across the various age groups.

Apprenticeship pay will go up from £4.30 to £4.81. Note: 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 also announced plans to introduce a health and social care levy of 1.25% 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 NIC depend on your employment status and how much you earn. Not everybody has to pay NI, but contributions count towards your state pension and other benefits.

Employers should update their payroll to ensure that the NMW/NLW increases from April 1, 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 selfemployed 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). The only way to make money in your salon is by charging enough to cover all your costs and make a profit.

Price increases

Salon 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, on 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 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.

About the NHBF

The 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.

Join the NHBF before the end of April 2022 and quote PBA25 to get £25 off your membership fee. Find out more at nhbf.co.uk