Spring Budget explained: what it means for the aesthetics industry

On March 6, chancellor Jeremy Hunt announced the Spring Budget in the House of Commons.

The announcement included an increase to the VAT registration threshold, a cut to national insurance and an extension on the Government loan scheme for small businesses.

Jeremy Hunt has said the Office for Budget Responsibility (OBR) expects the economy to grow by 0.8% this year and 1.9% next year – 0.5% higher than the autumn forecast, adding this growth is expected to continue on this trend until 2027.

Key points

• The VAT registration threshold will increase from £85,000 to £90,000 from April 1
• There will be a cut to National Insurance by 2p from April 6
• An extension on Covid-era Government loan scheme for small businesses until March 2026
• A continuation of Government funding for those struggling with cost-of-living pressure for another six months
• UK’s inflation rate to fall below 2% in a few months
• Increase to child benefit earning threshold.

Industry reaction:

Chief executive of the British Association (BABTAC) and Confederation of International Beauty Therapy and Cosmetology (CIBTAC), Lesley Blair MBE said, “The ongoing cost-of-living crisis has affected everyone and remains a huge concern for many businesses. We’re hopeful that this budget will offer some relief, welcoming in particular the increase to the VAT threshold, given our ongoing appeals to government for VAT reform for our sector.

She continued, “Not only are we a proven leading contributor to UK economy, but also a sector unique in our ability to improve the wellbeing of society, while supporting the revival of the British high street. We believe more support should therefore be forthcoming and will continue to liaise with government to secure this.”

Nada Ali Redha, founder and chief executive of PLIM shared, "While we appreciate the government's efforts to support small businesses and enhance consumer purchasing power, there remains room for improvement. Aesthetic clinics continue to encounter significant challenges in accessing funding for expansion. While a reduction in VAT is a positive step, its impact may not be substantial enough to stimulate significant growth.

"Furthermore, the extension of funds such as the Growth Fund often favors male-led businesses, despite the fact that the majority of aesthetic clinics are owned and operated by female entrepreneurs. It's imperative that funding opportunities become more inclusive to support the growth of this sector.

"The freeze on fuel duty will undoubtedly alleviate some of the financial burden on consumers, which will in turn positively affect overall consumption patterns. Such initiatives, combined with innovative financing options like PLIM, represent a more strategic approach to managing finances for both SMEs and consumers alike."

Caroline Larissey, chief executive at the National Hair and Beauty Federation added, “We’re pleased that the Government has answered our call for changes to VAT with the raising of the VAT threshold, taking into account inflation. However, there’s more to do. We welcome further discussions with HM Treasury around future VAT reform to ensure a fairer system and to help level the playing field in the hair and beauty sector, including options for reduced rates and tiered rates around the threshold.”