CT600 for Hairdressers: A Complete Tax Guide for Salon Owners
Running a limited company hairdressing salon means filing a company tax return — known as the CT600 — every year with HMRC. Whether you own a single chair rental business or manage a team of stylists, understanding which expenses reduce your taxable profit can make a real difference to your corporation tax bill.
This guide explains how corporation tax works for hairdressers, which business costs you can deduct, and how to avoid the most common mistakes when completing your company tax return.
How Corporation Tax Works for Hairdressers
When your limited company makes a profit, it pays corporation tax on those profits. The rate you pay depends on how much profit your company earns in the accounting period:
- 19% — small profits rate, applies to profits of £50,000 or less
- 25% — main rate, applies to profits over £250,000
- Marginal relief — if your profits fall between £50,000 and £250,000, a blended rate applies
For most hairdressing businesses, profits comfortably fall within the small profits band, meaning you'll pay corporation tax at 19%. If your salon has grown significantly and profits are approaching £50,000, it's worth planning ahead — the CT600 Box 450: Marginal Relief guide explains how this calculation works.
Your company tax return covers a 12-month accounting period, and you have 12 months from the end of that period to file it with HMRC. Payment of any corporation tax owed is due 9 months and 1 day after the accounting period ends.
Allowable Expenses for Hairdressers
Reducing your taxable profit means claiming every legitimate business expense. For hairdressing businesses, these typically include:
Products and Supplies
All products used in the salon are deductible:
- Hair colourants, bleach, toners, and developers
- Shampoos, conditioners, and treatments
- Styling products (wax, mousse, spray, serum)
- Foils, gloves, colour bowls, and mixing brushes
- Disposable items (neck strips, cotton wool, etc.)
Equipment and Tools
Scissors, clippers, hairdryers, straighteners, and other tools are deductible business expenses. For larger items of equipment — salon chairs, backwash units, reception desks — you claim through capital allowances rather than as a direct expense (see below).
Replacement parts, repairs, and servicing costs for equipment are also fully deductible as revenue expenditure.
Salon Premises
If you rent a salon or chair, the rent payments are fully deductible. If you own the premises through your company, the interest on any business mortgage (not the capital repayment) is deductible.
Business rates, utilities (electricity, water, heating), broadband, and business insurance are all allowable expenses.
Uniforms and Workwear
Branded uniforms and protective clothing (aprons, tunics, gloves) purchased for staff are deductible. General clothing — even if worn only at work — is not deductible unless it is clearly a uniform or protective garment.
Staff Costs
Salaries, employer's National Insurance contributions, and employer pension contributions are all deductible expenses. If you pay bonuses or provide staff benefits (such as subsidised training or team events), these are generally deductible subject to HMRC rules.
Training and CPD
Courses that maintain or improve existing skills are deductible — for example, advanced colouring techniques, balayage training, or courses covering new styling trends. Training costs for you as a director are deductible if the training is work-related.
Note: Training costs to qualify in an entirely new area — for example, courses to add aesthetic treatments to your service range — are not always deductible as revenue expenditure. Seek advice from an accountant if you are investing significantly in expanding into a new field.
Marketing and Advertising
Social media advertising, website hosting, photography for your portfolio, and print materials such as business cards and service menus are all deductible. Costs for booking systems or salon management software subscriptions are also deductible.
Professional Fees
Accountancy fees, bookkeeping costs, and any legal fees incurred in connection with your business are deductible.
Capital Allowances for Salon Equipment
Major equipment purchases — salon chairs, backwash units, styling stations, UV sterilisers, and similar items — are claimed through capital allowances rather than as ordinary business expenses.
The Annual Investment Allowance (AIA) lets you deduct the full cost of qualifying plant and machinery in the year you buy it, up to the annual limit. For most hairdressing salons, the AIA limit is more than sufficient to cover any equipment purchases in a typical year. This is reported in CT600 Box 690: AIA Claimed.
If your purchases exceed the AIA limit, the excess goes into a capital allowances pool and is written down at a set percentage each year. The CT600 Box 700: Capital Allowances Pool guide explains how the pool works in practice.
Refitting your salon? If you are undertaking a significant salon refit, you may be able to claim capital allowances on fixtures and fittings that form part of the building — such as electrical systems, plumbing for backwash units, and fitted storage. This can be a complex area; an accountant can help you identify and maximise your claim.
Self-Employed Stylists and Chair Rental
Many salons operate a chair rental model, where stylists rent space and operate as self-employed individuals. If this is your model:
- The chair rental income received by your company is trading income — include it in your company's turnover
- You do not pay employer's National Insurance on self-employed stylists' earnings
- You cannot deduct amounts paid to self-employed contractors as "wages" in the same way as payroll costs — they are not employees
Accounting Periods and Your Company Tax Return
Your company's accounting period is typically 12 months and matches your financial year. If your company has just started trading, the first accounting period may be shorter or longer than 12 months.
For accounting periods over 12 months, HMRC requires you to file two CT600 returns — one for the first 12 months and one for the remainder. Most modern corporation tax software handles this automatically.
Your company tax return must be filed online with HMRC. You'll need to submit accounts in iXBRL format alongside the CT600. For smaller hairdressing companies, micro-entity accounts are usually sufficient — these are simplified accounts that require minimal disclosure.
Common Mistakes to Avoid
Mixing personal and business expenses: If personal hair products or clothing are put through the company, HMRC can disallow the expense and charge penalties. Keep a dedicated business bank account and only process genuine business costs through it.
Missing the AIA opportunity: Capital allowances can only be claimed for the accounting period in which the equipment was purchased. Review any equipment bought during the year before the accounts are finalised to ensure nothing has been overlooked.
Forgetting self-employed stylist invoices: If you use self-employed stylists, make sure you hold invoices for all payments. Without proper invoices, HMRC can question whether the costs are genuine business expenses.
Not accounting for private use: If you use a company vehicle for personal journeys, you must account for the private use element. This affects the deductible amount and may trigger a benefit-in-kind charge.
Late filing: Corporation tax returns must be filed within 12 months of the accounting period end. Late filing incurs automatic penalties from HMRC. File on time even if you owe no tax.
Summary
Filing a company tax return as a hairdresser involves identifying all your legitimate business expenses, claiming capital allowances on equipment and salon fittings, and reporting your profits accurately to HMRC. For most salons, the 19% small profits rate applies. Keep clear records of all purchases, maintain separate business and personal accounts, and use the Annual Investment Allowance to offset major equipment costs in full in the year of purchase.