IR35 Salon Rental Agreements

There is a lot of confusion regarding IR35 service agreements. In this article I intend to keep things very simple because the relevant authorities tend to use complicated language which confuses us all. Please read more at the bottom of this page.

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IR35 Service agreements can still be used by Salon Owners, Hairdressers, Beauty Therapists, Barbers, Nail Technicians and Eyebrow Technicians. However, everyone must ensure that they have a full understanding of the rules, regulations, and the law – which is where we, the Salon Managers Academy are trying to help.  

In time gone by a Room, Chair or Table renter would pay the salon owner a fixed weekly or monthly fee to “Hire” space in the salon and then bring their own clients into the salon and charge them for their services. The government in their infinite wisdom decided to clamp down on this because much of the money changing hands was not being reported to the HMRC.

So those Salon Owners who wish to rent space and those salon professionals who wish to work independently it is possible providing you follow the rules. Here is how to proceed:

In the first instance the independent Salon Professional Hairdresser, Beauty Therapist, Barber, Nail Technician, Eyebrow Technician must register as a company with company’s house, therefore creating a service company. 

The salon owner must decide if they want the independent salon professional to carry out services on their own clients only or a combination of their own clients and the salon clients. This is important because there are distinct and separate contracts for each of those situations. The salon owner must also decide if they will charge the Salon Professional a fixed rental fee or a straight percentage of earnings or a combination of both.

A fixed rate may be better if the Salon Owner selects that the renter will service their own clients only – and – if the salon owner selects that the renter will work with both their own clients and salon clients therefore charging a fixed rate rental and possibly pay a percentage of the salon client charge to the renter when the renter works with salon clients.