is anyone vat registered as a home based salon?


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Well-Known Member
Sep 14, 2006
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Does anyone choose to be vat registered even theough they are earning under the £60000 (or whatever the amount is where it is compulsory the register) ?

Does anyone know the benefits/drawbacks of doing so? I am a home based salon.

Thanks x
I can't imagine anyone WANTING to register for vat so I doubt you'll get anyone with a home salon asking to register.
Its not normally advisable for someone to register voluantarily for VAT if their customers are themselves not VAT registered. You would have to charge VAT on your treatments, either making your prices artificially higher than the competition, or if you charge the same as the competition, make a smaller profit yourself.

If you think you will be earning under the limit (around £60000) then there really is no point in registering for VAT. If you do you will have to give the taxman £17.50 of every £100 you make and can only claim the vat back on your business purchases.

So if you charge £10 for a treatment that costs you £1 lose £1.57 - soon adds up!!

Hope this helps x
Is it worth it?

To know this you have to look at your client base (are they Vat registered and expect a Vat invoice)? What purchases your business makes? And whether you want the additional work of preparing a Vat return?

In short I would feel that it is not really worth it if you are making a profit (and if you are not making a profit is what you are doing really worth it?)

Let me give you an example of why this is with a product you retail on to a client.
Product X's RRP is £24.50 and its cost price is £12.51+vat, meaning it costs you £14.70. This means you make a profit of £9.80 if you are not Vat registered. If you are Vat registered then you effectively sell the product for £20.85 (20.85+17.5%=£24.50), so the profit you make is £8.34 (20.85-12.51).

This is even worse with treatments - on a £30 facial you would only get £25.53 and the Vat-Man/Woman would take £4.47. I am sure you are thinking 'but wouldn't I claim back the Vat from the cost of my treatment products' and yes, you would but how many treatments do you get out of those products. The majority cost in a treatment is your time which you can not claim any Vat back on.

There are clever ways of doing your books to reduce your tax liability, payment by dividend instead of PAYE, you may be able to offset the cost of a washing machine against tax (or a proportion of the cost of it) because you use it for your business (washing towels etc)and contractual obligations to name a few. However, I would recommend you speak to a friendly accountant about this as you don't want to be done for tax evasion.

If you would like some more advice on this type of thing please feel free to drop me a line.

Beauty products | Beauty Therapy | Professional Treatments | Beauty Supplies-
You mainly are vat registered if you are a large salon and earn more than £53.000 a year.

I am a freelance nail tech and won't be earning that sort of money for a long time yet. Especially as i don't want to work all the hours god sends.

I wouldn't worry about it at all unless you own a large salon and employ quite a few people.
My accountant told me that you don't benefit from being VAT registered until you earn around £80,000.
i am vat registered, i had to kit out a salon and the vat was rediculous. I would rather keep my prices lower at first then gradually build them up so my net profit is more, i will get back what i would have lost in vat on everything for the salon and that will cover what i ''lose'' hairdressing. A lot of people that are not vat registered just cant bearsed with the paperwork, it makes sense to be registered IMO.
I think it really does depend on your turnover.....I will avoid being VAT registered like the plague....until such time as I have day lol!

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