Accounting for barbers and barbershops

Shop owners and chair renters

Most barbershops mix two kinds of business under one roof. The owner runs the shop, takes payment for their own cuts and often rents chairs to self-employed barbers. Each chair renter runs a separate business: they set their prices, take their own money and pay the owner rent.

The chair rent sits on both sets of books. For the owner it is income. For the barber it is an allowable expense.

Employed or self-employed?

Calling someone a chair renter doesn’t make them self-employed. HMRC looks at how the work is actually done. A barber who sets their own hours, keeps their own clients, charges their own prices, buys their own kit and earns nothing when the chair is empty looks self-employed. One whose hours, prices and clients are set by the shop, or who is paid a set rate, looks employed.

Get it wrong and the owner can face PAYE and National Insurance on what was paid, plus interest and penalties. Put the arrangement in writing, make sure the day-to-day matches it, and run each barber through HMRC’s Check Employment Status for Tax tool. HMRC stands by its result if the answers are accurate.

Card, cash and app payouts

Card readers and booking apps pay out after their fees. Your turnover is what customers paid, not what landed in the bank. Record the full takings, then the card and booking fees as an expense.

Cash goes on the books the same as card. Bank it or record it daily; gaps between what the till says and what was banked are what HMRC asks about first.

Tips you keep are part of your income, whether they arrive in cash or through the card machine. If you’re a shop owner sharing tips with employees, they go through payroll.

Worked example

The card payouts are £33,012. Turnover is £52,800: the card fees are an expense, and cash and chair rent count too. That puts this owner over the £50,000 Making Tax Digital threshold.

Allowable expenses

• Chair rent, if you rent a chair
• Clippers, trimmers, scissors, razors and blades
• Products used on clients, and stock you sell
• Card reader, booking app and payment fees
• Insurance, hygiene supplies, towels and laundry
• Training that supports the business you already run: keeping your skills up to date, such as new cutting techniques, or new skills that help run it, such as bookkeeping or using new booking software

Clothing is allowable only if it is a uniform or protective wear, such as a branded tunic or a cape. Everyday clothes are not, even if you only wear them at work. Training to start a new business, or to move into work unrelated to the shop, is not allowable. See Expenses if you’re self-employed.

VAT and chair rent

You must register for VAT when your taxable turnover goes over £90,000 in any rolling 12 months, or if you expect it to go over £90,000 in the next 30 days alone.

Chair rent is usually standard-rated, not exempt. HMRC treats renting a chair together with the use of basins, reception, booking or laundry as a supply of salon facilities, not a letting of property, and the courts have backed that. The exception is a clearly separate area, such as a whole room or floor, let with no other services. So a VAT-registered owner normally charges VAT on chair rent, and the rent counts towards the owner’s VAT threshold.

Each self-employed barber has their own threshold. HMRC challenges shops that split one business into several to stay under it.

Making Tax Digital

From 6 April 2026, sole traders with qualifying income over £50,000 must keep digital records and send quarterly updates. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028. It is measured on turnover before expenses, so a barber with modest profits can still be in. See MTD thresholds and start dates and quarterly updates and deadlines.

We can set you up in a week: MTD-ready in a week.

How we help

A fixed monthly fee, agreed up front. Your card, app and cash takings are reconciled each month, chair rent is recorded on the right side, expenses are categorised, and the quarterly updates and tax return are filed on time. For shops, we keep the VAT position and the chair-renter paperwork in order too. Run a tattoo studio as well? See accounting for tattoo artists and studios.

About Andrew

Andrew Ramsell runs accounting and finance operations for owner-managed businesses, and builds the software that takes recurring work off their teams. He is based in Maidstone, works with barbers and shop owners across the UK, and is an AAT-qualified accountant and Xero certified advisor.

Sources

HMRC guidance on GOV.UK, checked 10 October 2026; the training rules were rechecked on 27 October 2026:

• Check employment status if you work in hair and beauty
• Check employment status for tax (CEST)
• Employment Status Manual: relevant factors (ESM0515)
• VAT Notice 742: land and property
• VAT Land and Property Manual: hairdressers’ chair rentals (VATLP19820)
• VAT registration: when to register
• Expenses if you’re self-employed
• Work out your qualifying income for MTD