Rent a Chair and Go Self-Employed? What Hair Stylists Need to Know About Tax

More hair stylists are choosing to rent a chair rather than stay on payroll. And we can see the appeal. Renting a chair offers greater flexibility, more control over pricing and the hours you work, and the opportunity to build your own client base. On the surface, it can look like an exciting next step.

But switching to self-employment is not just a change in how you are paid. It alters your legal responsibilities, your tax position and quite likely, your stress levels!

Are you thinking of renting a chair and going self-employed? Here is what to consider before you make the move.

What changes when you become self-employed?

If you rent a chair, you are usually classed as self-employed. That means you are no longer taxed through PAYE. Instead, you are responsible for:

• Registering for Self-Assessment with HMRC
  
  
• Keeping records of your income and expenses
  
  
• Submitting a tax return each year
  
  
• Paying Income Tax and National Insurance yourself

You will typically pay Class 2 and Class 4 National Insurance contributions, depending on your profits. Tax is calculated on your profit, not your turnover. In simple terms, that is your income minus allowable business expenses.

It also means no employer sick pay, no holiday pay and no automatic pension contributions. The trade-off is that you have more control over your pricing, hours and potentially your earnings.

Understanding your tax bill

One of the biggest shocks for newly self-employed stylists is how tax is paid.

Instead of tax being deducted weekly or monthly, you pay in larger instalments. For many, this includes “payments on account” – advance payments towards the following year’s tax bill.

If you do not set money aside regularly, the first tax bill can feel overwhelming. A sensible rule of thumb is to set aside around 25 to 30% of everything you earn into a separate savings account. For most basic rate taxpayers, this will usually cover Income Tax and Class 4 National Insurance, with a small buffer. If your profits increase and you move into higher rate tax, you may need to set aside more.

Making Tax Digital is coming

The government is rolling out Making Tax Digital for Income Tax for self-employed businesses. From April 2026, those with annual business income over £50,000 will need to keep digital records and submit quarterly updates to HMRC using compatible software.

This is a change from the old annual tax return mindset. Regular, digital record-keeping will help you track your taxes as you go and avoid surprises.

If you are not already using digital accounting tools, now is the time to start. Good software connects your invoices, expenses and bank transactions and makes reporting simpler.

What can you claim as expenses?

Running your own business means you can claim certain costs against your income. Common examples for hair stylists include:

• Chair rental fees
  
  
• Professional products and tools
  
  
• Insurance
  
  
• Training courses
  
  
• Marketing and advertising
  
  
• A proportion of mobile phone costs
  
  
• Uniform or branded clothing

If you work from home for part of your admin, you may also be able to claim a small amount for home office use.

Tip: Clear record-keeping matters. Keep receipts and use accounting software or a simple spreadsheet. The more organised you are, the easier it is to stay compliant and avoid overpaying.

Are you genuinely self-employed?

It is important that your working arrangement reflects the reality of your situation.

If the salon controls your hours, pricing and how you work, HMRC may question whether you are truly self-employed. The distinction between employment and self-employment affects tax, rights and responsibilities.

Before switching, it is worth reviewing your contract and understanding where you stand.

Avoiding common mistakes

Newly self-employed stylists often make similar errors:

• Failing to register for Self-Assessment on time
  
  
• Not saving enough for tax
  
  
• Mixing personal and business spending
  
  
• Forgetting about payments on account
  
  
• Missing filing deadlines

Penalties and interest can add up quickly. Most issues are avoidable with early advice and a basic system.

A growing opportunity

As more stylists explore self-employment, practical, straightforward advice becomes essential. For hair professionals considering the move, the key questions are simple:

• Do you understand your responsibilities?
  
  
• Have you budgeted for your tax bill?
  
  
• Are your records ready for digital reporting?

Taking time to get the basics right can make the difference between a stressful first year and a confident start to running your own business.

How we can help

At Navigate, we work with self-employed individuals and small businesses across a range of trades, including those in the personal care sector.

We help new and established self-employed stylists set up properly from day one. That includes registering with HMRC, setting up simple digital bookkeeping that meets Making Tax Digital requirements, explaining how much to set aside for tax and National Insurance, and helping you avoid the common pitfalls that catch people out in their first year.

If you are thinking about going self-employed, or you have already made the move and want reassurance that everything is set up correctly, we are here to help. You can call us on 01709 589 439 or book a call with our team to talk it through.