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General

Should salon and barbershop owners have a will?

Do you have a will in place, or  are you just putting it off?

We all know that having a will in place is a no brainer but as it transpires, half of the adults in the UK don’t get round to making one. A story reported in the FT recently definitely highlights the mess you can get into if you die intestate.

Perhaps we need such shocking news stories as a ‘conversation starter’ to prompt thinking about the division of our assets after our death: whether we have children, or not.

Latest case

A shocking case was reported in the FT of two step-sisters who were arguing over which of them should inherit their late parents’ house. The elderly couple had been found dead in their home, and it was not possible to determine who had died first.

The situation was complicated because the father had not made a will, and his younger wife had made no provision in her will for her step daughter. If the wife was deemed to have died first her share in the home would pass to her husband. Under the intestacy rules his estate would pass only to his daughter and not to his wife’s daughter.

If the husband died first, the wife would inherit the property and it then would pass only to her own daughter under her will.

The Court decided that the Law of Property Act 1925 should apply, which determines that the elder of the two is deemed to have died first. The wife’s daughter thus inherited the entire property to the exclusion of her step-sister.

This gordian knot would have been easier to unwind if both individuals had made wills with express provision for both daughters.

DIY wills or not?

You can put your own will together, or even buy a DIY will from amazon; and this might be ok if your will is simple. But generally it is recommended to instruct a solicitor to do this.

I was looking at an interesting article on how to get a solicitor-written wills in return for a small charity donation, which may be of interest to you:

https://www.moneysavingexpert.com/family/free-cheap-wills/

  • Posted on November 15th, 2019 in General

IR35 | Should salon owners be worried?

What is IR35?

The IR35 tax rules (previously known as the “employment intermediaries” rules and more lately called “off-payroll working” by HMRC) apply when a worker supplies his/her personal services through a Ltd company or partnership to an end client.

In practical terms for example: a stylists works in your salon, barbershop, or spa but you pay them via their Ltd company (one that they have set up), rather than pay them directly (as you would do an employee, or self employed person).

Another example is where you have a ‘rent a chair’ arrangement with someone, but  the contract is between your salon and a Ltd company (one that they have set up).

These Ltd companies that they have set up are also known as personal service companies “PSC”.

By using such a PSC, the stylist opens up the tax advantages of a Ltd company and HMRC doesn’t like this because it knows it means less tax and national insurance can be collected from the person. The rules are therefore intended to ensure that individuals cannot avoid PAYE by routing their income via a PSC.

How does HMRC use IR35?

HMRC applies the IR35 rules in cases where they consider a person is “hiding” behind a PSC but is for all intents and purposes really an employee, or  self employed individual. Once HMRC get a whiff of this set up, they simply compare the person’s set up in practice against the HMRC ’employment status test for PAYE’ (called the CEST test) and if the person fails it, they consider them an employee.

The consequence is that HMRC would then go after the person behind the PSC for income tax and NIC owed.

At the moment, the burden is on the person behind the PSC (this being the person HMRC would go after) but things are about to change…

From April 2020

From April 2020, the onus to check the employment status of any possible IR35 situation and possibly who will need to back pay the PAYE moves to the ‘end Client’ – i.e. the salon owner; but for now, this only applies to medium and large sized businesses only. For small businesses, the onus remains with the PSC, at least for now anyway.

‘Small’ is defined as: 50 or less employees, turnover is less than £10.2million and their balance sheet shows £5.1million or less.

So pretty much all independent salons are exempt at the moment.

Should you be worried then?

For the vast majority of Salon owners, IR35 should not be a worry for now, for at least 1 of 2 reasons:

  1. it only applies if the salon has a contract in place (either in writing or in practice) with a PSC (for example a ‘rent a chair’ arrangement with an individual using a LTD company themselves;
  2. it doesn’t apply to small businesses (ie. you’re exempt as you have less than 50 employees, your turnover is less than £10.2million and your balance sheet assets are less than £5.1million).

But watch out for self employed individuals who don’t have a PSC

Although similar (but nothing to do with IR35) the more likely risk that salons face is by treating employees as self employed individuals; but you can check this by running them through the online HMRC CEST test (link below).

In conclusion

It’s an issue that the government has being trying to attack for years – and we’ve been following their attempts very carefully.

As the NHF states: “During the Queen’s Speech Boris Johnson gave an early indication that the government is concerned that the rising rates of self-employment across many sectors, including hair, barbering and beauty, could come at a cost for the government and taxpayers in lost revenues.”

And we know that Johnson recently said: “We will increase fairness and flexibility in the labour market by stopping employers and workers experiencing significantly different outcomes from flexible forms of working.”

We continue to watch this space very carefully!

Further reading

More info from HMRC can be found here:

HMRC’s CEST test can be found here:

Nicola Smyth: Make Money From Your Salon’s Retail Shelf

With over 19 years’ experience in the industry, Nicola Smyth is an international award winning hairdresser who now has 4 amazing salons (in Leamington Spa, Warwick, and Kenilworth) along with co-owner Dan Smyth Humphriss, who looks after the business side of things.

   

Salonfrog’s Andrew chatted to Nicola and Dan backstage at Salon International, before joining them at their one hour workshop on how to make money from selling retail stock. Some of what they spoke about was quite different to what we’d seen before in the hair & beauty industry and very refreshing to say the least!

Here’s what Andrew had to say:

First off, I have to say that Nicola and Dan exude energy and it’s obvious how enthusiastic they both are!

I didn’t have too long before they presented their workshop but while chatting to them, two facts became very apparent:

#1 Nicola was adamant on how important the awards that they had won had been to the growth and success of their salons.

#2 Dan agreed but added that they’d got to where they are by focussing on what really matters and also by not being too greedy; explaining that yes, you need to make profit but you also need to treat your staff right, ensuring a share of profits are passed to them while also putting money back into the business. Both Nicola and Dan explored this philosophy more in the workshop.

And finally, it came to light that they both plowed every penny they had into their business in the beginning – even using their honeymoon money!

Then I settled down for the workshop.

Both Nicola and Dan are really friendly and I saw how they welcomed every guest into their workshop personally as each arrived.

Nicola opened by running through the history of their salon business and the multiple awards it had won before moving onto the subject of how to maximise the money you make from selling retail. Nicola indicated the value of £ retail sales to their business, which I won’t print here, but left most of the room speechless, including me!

With that in mind, Nicola explained that to get those sort of retails sale, you need to have 3 key pieces lined up:

  1. Have enough stock to sell in the first place
    which is more than you’d think and quite opposite to a lot of salons that try not to tie cash up in their shelf
  2. Get a key support mechanism in place
    This comes from the top down, supporting your staff; but also from your key suppliers who you’d be amazed what support they are able to give if you ask
  3. Give your stylists the confidence to drive sales
    as you’ll often find staff don’t think they can sell or it may not be natural to them 

Nicola and Dan expanded on each of these pieces, explaining the issues most salons face by not having them in place and how their own salons also went through the same journey to get where they are now.

The rest of the workshop really nailed down these 3 things – often from quite a different approach to many salon owners.

I won’t say much more as Nicola runs courses on how to do all of this – and she can tell you in a classroom setting over half a day better than I can in a blog! But here’s just 5 of the many points they covered which will give you an idea:

  • Commissions on their own aren’t enough
    Nicola described how their staff receive the usual 10% commission on retail like in most salons. But then went on to explain how this isn’t enough – and that having clear incentives in place on top of a commission structure had been the real driver to their boost in retail sales.They’ve tried various types of incentives but quite seriously ask the audience: “why not send your biggest sellers to a local health spa if they reach their targets?!”
    And if you think this question is tongue in cheek – it’s not. In one of their incentives, they sent everyone to Spain! More of this below.One point they were both adamant on: you should make it fun rather than a stress for your staff to achieve their targets.
  • Get the whole team involved
    Nicola & Dan get all their staff involved in the selling target.“The idea is to get everyone on board,” explained Nicola, adding, “it only takes one person to drag everyone else down.”So for example they took the whole team (not just the best sellers) for a weekend to Marbella when the collective sales target was reached! Even including the staff that hadn’t reached their targets – if they had been excluded, the Team would suddenly become separated – and this can have serious issues back in the Salon.And it wasn’t as expensive as you’d think.“It all goes back to not being greedy,” reiterates Dan.
  • What’s not measured isn’t done
    Nicola and Dan are very strict on having weekly 1-2-1’s with every staff member, where they talk about what’s happening both in and outside of the salon.Dan also sends daily performance targets to his staff every night by a WhatsApp group! A simple to read report that shows where everyone is versus their targets. So there’s no escaping!
  • Sounds too expensive for Salon owners?
    Dan explained that having an incentive program in place isn’t expensive –  in fact, it’s self funding. From your typical 40% retail margin, 10% is your staff commission, 10% is put away towards the incentive program, and 20% goes towards profit and reinvestment into the business. And as the incentive program increases your retail sales, you end up having more profit to use. Again, it’s about not being greedy!
  • Leave your prejudices at home
    Never assume your Clients can’t afford to buy your retail. Instead, your staff’s mind set is to assume they can!All their staff are primed to give every one of their Clients a full consultation, every visit. They also show their clients how to recreate the look they’ve just had in the Salon at home themselves; running through the product that’s just been used, and even getting the Client to actually have a go with the straighteners or the brush to show they can really do it themselves once they get home. Nicola sums this up well:

    “If you show the Client they can do it themselves, using the product you’ve used, why wouldn’t they want to buy it?”

An hour goes quickly

I’ve just touched on some of the points of the workshop. Nicola and Dan have a refreshing and confident approach to retail, and they have the proof that it works. To finish off they conclude in their own modest style that it’s nothing other salons couldn’t also replicate.

How to contact Nicola and Dan

If you want to learn more about selling retail, Nicola or Dan would be happy to chat to you about how they can help with bespoke courses either at their salon, or at yours. Simply contact them here:

http://www.nicolasmyth.co.uk/contact-us/

  • Posted on November 1st, 2019 in General

Supercuts: why the hairdressing chain has entered administration

With over 200 salons and 1,400 employees, Supercuts went into administration this week. We look at why this has happened, what a CVA is, and what administration means.

Background

Supercuts (which is owned by Regis UK) has been struggling for the last few years. Last year, Regis had warned that a “perfect storm” of factors (including falling customer numbers and higher wages) had hurt the business, leading to “cash flow issues.”

On top of this, the rise in the legal minimum wage rate, the apprenticeship levy, higher business rates and an increase in the cost of product as a result of the Brexit-led fall in the value of the pound, would also be likely factors.

In 2017, Regis UK was sold by its American parent to global salons operator called the Beautiful Group, which is backed by a US private equity firm called Regent. Its most recent accounts show the business making a loss of £5m on sales of £65m in 2017.

CVA

To battle against its issues, the company embarked on a restructuring process called a company voluntary arrangement, or CVA.

With the CVA law on its side, it demanded its landlords to reduce their rent bills, including asking the landlords of more than 20 of its salons for free rent, as well as cuts to all the others.

Two of the four largest land owners in the UK (British Land and Hammerson) has mounted a legal challenge to overturn the company’s CVA and the outcome of this is yet to be decided. Rob Harding, joint administrator at Deloitte, said:

“Unfortunately, these trading challenges, coupled with the uncertainty caused by the legal challenge to the CVA have necessitated the need for an administration appointment. This is in order to provide protection for the business whilst restructuring and sale options are fully considered and explored.”

Administration

Administration (which is different to liquidation) is a process of creating a legal ringfence around a struggling, insolvent company to prevent further threats to its creditors (which includes the salons’ landlords, its suppliers and its staff).

To do this, it appoints an administrator (in this case the accountancy firm Deloitte) who will need to establish whether the company could remain viable (i.e. could become profitable again). Deloitte will then establishes a timeframe for the administration and implement further restructuring measures to improve the company’s position (which in this case includes looking for a buyer).

What happens next

The salons are expected to trade as normal for the time being and industry sources told Sky News that they expect a buyer for the chain to be found.

  • Posted on October 25th, 2019 in General

Budget Day announced as Wednesday 6 November 2019

The format of what we can expect on 6 November is understood to depend on whether a Brexit deal is agreed, or not.

In the event of a no-deal Brexit, it is anticipated that there will be just a simple economic statement on 6 November.
The announcement of the Budget date by HM Treasury indicates that the economic statement would be a precursor to a Budget in the following weeks.

Read more about getting ready for a no-deal brexit here: Brexit | is your salon or barbershop ready?

  • Posted on October 15th, 2019 in General

Brexit | is your salon or barbershop ready?

Here’s Salonfog’s quick-start guide to getting ready for a no-deal Brexit; outlining a variety of areas that could impact your salon or barbershop, and so help you start preparing.

While there is still no certainty around what Brexit will mean, salon and barbershop owners need to have contingency plans in place that are sufficiently flexible to cope with a variety of possible outcomes. These considerations reflect “no deal” being reached, but may also be relevant in other scenarios.

Here’s our top 5 considerations:

1. GDPR

If there is a “no deal” Brexit the EU GDPR will no longer be law in the UK. However, as the UK government intends to write the GDPR into UK law, from all practical perspectives, GDPR will continue to apply.

2. Buying product from the EU

If you purchase product (either to use in the salon or sell as retail) from an EU country (which you may well do over the internet), you could see that stocks are harder to get hold of, or indeed the price may increase.

Tariffs, or customs duties as they are known in the UK, are a tax levied on imports. There are no tariffs on trade wholly within the EU customs union, but if the UK leaves the EU without a deal they will apply to UK-EU trade. Currently the UK’s trade with the rest of the world is subject to EU tariff rates. After the UK leaves the EU, tariffs will depend on trade agreements the UK has negotiated, which may well differ from country to country.

3. VAT

If the UK leaves the EU without reaching any agreement, the UK Government has indicated that there will be a number of changes to the VAT rules.

It has confirmed though that in the short term, it will continue to apply the existing VAT law as close as possible to that already in place. We know that it has been waiting to leave the EU before it undertakes a full overhaul of the VAT  legislation, but at least in the short term, VAT life continues as-is within the UK; with any changes only relating to transactions between the UK and EU member states.

4. Are you (or any of your staff) EU,EEA, or Swiss-nationals?

If so, you (or they) will need to register for the settlement scheme.

Ensure any relevant employees are aware of the settlement scheme and the need to register. They will need to be living in the UK before it leaves the EU to apply and can see more details here:

https://www.gov.uk/settled-status-eu-citizens-families

If there is no deal, the deadline for applying will be 31 December 2020.

5. Cash

The consequences of a no deal Brexit are unclear. Nevertheless, it is always prudent for salon and barbershop owners to plan ahead and think about how they would deal with economic uncertainty, which inevitably occurs from time to time anyway. Economic uncertainty might affect your sales income (if Clients decide to reduce their personal spending), and your stock levels may reduce (if importing them becomes harder or more expensive).

Owners may need more cash on hand so they can make sure they continue to make payments on time (and have enough to live on of course). So would be worth having a cash provision at the ready, or at least know you have credit facility with your bank just in case.

Here’s hoping…

This doom and gloom scenario may or may not eventually transpire, but it’s worth considering it and ensuring you’re ready if it does.

 

  • Posted on October 12th, 2019 in General

Salonfrog talks to The Salon Magazine | Oct 2019

The Salon Magazine contacted us to ask a simple question: “From what Salonfrog has seen, what do our most successful salon owners do, to make their salons successful?”

We started telling them, and they soon asked us to write an article for their magazine; and what started as a 400 word request soon became an 800 word answer!

We’ve include the article below the pictures (plus links to the magazine at the bottom).

A recipe for success

What do successful salon owners do all day? Salonfrog explained that in their accountancy practice they see that some salon owners are more successful than others, here they reveal the steps to all-round salon success.

The successful business owners have usually made a conscious choice to be successful. Here’s what they do that most don’t.

Define what success means

Successful owners pick their definition of success. They ask themselves why they have a salon.

What does success mean to you? Do you want a steady income, or do you want to take a risk and open other salons? What services are you really selling? Why sell these and not others? Your answer might reflect the age of the business. In the growth phase, you want to survive, flourish and expand. If you’re in a maintenance period, things ticking along, you may be happy with the status quo. If you want to sell or retire, you may want to restructure the business in readiness.

Smart owners constantly revisit their definition of success. They bring their idea of success to their accountant, who will tailor advice, allowing their plan to be created.

Measure yourself

The best owners have key performance figures and compare these to their plan. They know they can control only what they measure. They also know they can’t measure everything, so they pick key measurements carefully.

Here’s some you might choose:

• Monthly sales target
• Staff utilisation – overheads walk on two legs!
• Retail sales rate – does your stock sell before you have to pay for it?
• Average customer spend – upselling transforms profits
• Repeat Client rate – are you winning long-term fans?
• Client growth rate – is your marketing and word-of-mouth working?

Again, pick a measure that reflects your plan.

No-one’s ever died of delegation

Why do so many salon owners never really grow their business? The answer is delegation. In Michael Gerber’s classic book, The E-Myth Revisited, we see how every small business owner has three conflicting sides to their personality: an entrepreneur, a technician and a manager. The entrepreneur wants to open a chain of cool salons; the technician just wants to cut hair; and the manager just wants everyone to stick to the rota, dammit. All three get in each other’s way; all three are disillusioned and want to quit. They’re all found in the same person – you.

Gerber’s bold solution is for salon owners to remove themselves from the business and really commit to delegation and outsourcing. Our most successful owners use Gerber’s ideas often (whether they know it or not). There’s a ton of stuff that accountants can take off an owner’s hands, so delegate it to them! As we say, “You can do anything you want, but you can’t do everything”. Hi-growth salon owners will delegate even those tasks they enjoy. They work ‘on’ the business as much as they work ‘in’ it.

Watch your cash

Many businesses go bankrupt while making a good profit. That’s a strange idea for novice owners to get their head around, but they soon do, once they hire staff and premises. That’s when they discover their money comes in gently and goes out in sudden, awful spikes.

To run out of cash is to run out of time. If you’ve got cash but no customers you can always try again tomorrow – but if you’ve no cash, there is no tomorrow. Your staff, your landlord and HMRC want paying today, and if you can’t, you’re done.

That’s why the best salon owners watch their cash like a hawk. They ask their accountant to do a cash flow projection, which is a sort of calendar with a theoretical doomsday marked on it. Few want to read it, but there’s no arguing with it. Profit is mere opinion, but cash in the bank is always a fact.

Have a not-to-do list

Everyone has a to-do list. You’ve plenty on yours, so you might not feel like making another – but all the best salon owners have a ‘not-to-do’ list. They use it to highlight red flags that can come between them and success. And they share their not-to-do list with their staff too.

A good not-to-do list might include:

• trying to please everyone and worrying about what they think
• ducking difficult decisions, maybe about staff
• doing what’s trendy and interesting, rather than profitable
• ignoring your health and never taking time off
• thinking the screen is your job (email is simply a list of someone else’s priorities!)
• take meetings without a clear purpose, preferably yours!

If these five best practices sound like too much to do, we should say that successful salon owners are often the happiest and fulfilled among all the clients we know. It’s just that some owners know how to grow a salon. It is a knack. It starts with knowing yourself and knowing that you can’t do everything.

Andrew Barraclough is from Salonfrog, a salon specialist accountancy firm which provides a full array of services wherever you are in the UK. Head to salonfrog.com for more details.

Links:

To magazine: http://thesalonmagazine.co.uk/the-salon-e-magazine-october-2019-issue/

To article: https://issuu.com/cimonline/docs/salon_october_2019_-_lr_08aeb28e946d06/108

  • Posted on October 7th, 2019 in General

Salonfrog at Salon International 2019!

Jason and Andrew from Salonfrog spent the weekend at Salon International, at London ExCeL (5th-6th October 2019).

Wow – what a busy place!

They met so many people: Clients, non-Clients, Speakers, and also had numerous meetings with the key software providers like Phorest and Timely (more of which in a future post); as well as meeting up with the various industry magazine editors there (of which Salonfrog has been featured in most of them).

And as if that was not enough, they had time to  enjoy the shows, demo’s and checking out the latest scissors!

 

  • Posted on October 7th, 2019 in General

Spicing Up your Salon’s social media content – interview with Media Bloom (part 2)

If you missed part one, have a look here: How successful salons & barbershops are using social media – interview with Media Bloom (part 1).

In part 2, Larisa from Media Bloom talks to us about how Salon, Barbershop and Spa owners are Spicing Up their social media content.

Here’s what Larisa chatted to us about:

“One of the keys to social media success for your salon is keeping the audience engaged and interested in what you have to say. An easy way of doing this is by sending your message across in different forms of content.
These are a few content ideas that will make your audience stop when they see your salon, barbershop or spa’s name on their feed:

1. Facebook Slideshows
By creating the post in the Facebook Creator Studio https://business.facebook.com/creatorstudio/ you will be able to create different types of content including slideshows (choose multimedia). With Christmas fast approaching, you can add a few images with ideas of hairstyles for the festive season accompanied by cheerful music for example.

The moving element will make people stop.


2. Polls

Polls are a great way of engaging with your followers. They work great on Instagram stories, Facebook page or Twitter. On Facebook and Instagram you can add photos, so you can ask followers to choose their favourite style, for example.

3. Special offers
The end goal of every company is to sell. But nobody likes seeing sales posts when relaxing over a social media scroll. To avoid this, use the special option on Facebook and Google my Business of adding an offer. This will make it seem like it is something that benefits your followers and not only your Salon. On Facebook and Google, you will find it at the top of the ‘create post’ option.

Want to know more?

These are just a few ideas of how to spice up your social media content. If you would like to learn more and get a chance to work on your social media Christmas campaign, contact Larisa directly to help you.

You can also follow Media Bloom on their facebook page: https://www.facebook.com/mediabloomltd
where you’ll find regular new content to help your salon.

If you need help with your social media, whether it is a one to one meeting or someone to manage it for you, you can contact Larisa at social@mediabloom.co.uk

  • Posted on September 27th, 2019 in General

Salon Owners – auto-enrolment pension | a recap

As a Salon or Barbershop owner, you need to consider auto-enrolment if you employ staff – and constantly revisit it. It’s a very complicated area to get your head around, so we’ve put together a recap for you.

What’s auto-enrolment

Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘auto-enrolment’. If you employ at least one person you are an employer and you have certain legal duties. We talk about the practicalities of how this affects you as salon owner below.

Who needs to be auto-enrolled?

You need to assess each of your employees and put them into one of three categories:

Category 1 | Eligible jobholders

These employees must be auto-enrolled and you must contribute to their pension as soon as they trigger all of these 4 criteria:

    • Aged between 22 and state pension age
    • Working in the UK
    • Earning more than the minimum earnings threshold, which at the moment is £10,000 per year (£768 per 4-weekly pay, or £833 per monthly pay)
    • Is not currently in a qualifying pension scheme

Category 2 | Non-eligible jobholders

These employees do not have to be auto-enrolled but can choose to opt in to your Salon’s pension scheme. If they do opt in, you have to also make contributions to their pension scheme:

    • Aged between 16 and 21, or between state pension age and 74
    • Working in the UK
    • Earning more than the minimum earnings threshold, which at the moment is £10,000 per year (£768 per 4-weekly pay, or £833 per monthly pay)

Category 3 | Entitled workers

Employers must ensure that entitled workers have access to a pension scheme if they request one, but you are not required to auto-enrol them nor make any contributions to their pension scheme:

    • Is aged between 16 and 74
    • Is working in the UK
    • Earns less than the minimum earnings threshold, which at the moment is £10,000 per year  (£768 per 4-weekly pay, or £833 per monthly pay)

Contribution %’s

Under law, a minimum contribution of 8% of the employee’s “qualifying earnings” must be made into their pension scheme, of which you as salon owner must contribute a minimum of 3% (with your employee contributing the remaining 5%).

What counts as “qualifying earnings”

For auto-enrolment, qualifying earnings includes all taxable income: basic pay, commission, bonus, overtime, SSP and SMP but excludes benefits (BIKs) and any expenses repaid to them.

Example

A stylists usually earns £750 basic per month, but this month also earns overtime of £50 and a bonus of £200. Therefore qualifying earnings are assessed as £1,000. If the stylists is not yet in the pension scheme but is now assessed as an “Eligible Jobholder” auto-enrolment is triggered that month, since they have breached the £833 minimum.

What earnings do you pay contributions on?

You’re not required to pay the contribution % on the employees whole salary though!

Instead, you are only required to pay the % on each employee’s earnings above a certain amount, which is set by the Government each year. Currently, the % is only applied to earnings above £6,136 pa (£472 per 4-weekly pay, or £512 per monthly pay)

Example

One of your stylists is earning £12,000 per year, so the 8% requirement is applied to £5,864 of their wages (i.e. £12,000 less £6,136).

Your responsibility as salon owner

  • All salon owners with at least ‘one worker’ regardless of their age and earnings must register online with The Pensions Regulator
  • You have a legal responsibility to let your staff know about auto-enrolment, even if they’re not eligible
  • If an employee becomes eligible, you must auto-enrol them into your pension scheme (although they can opt back out within a month without any contributions being made by either of you)
  • Every 3 years, you have to re-enrol any staff still working for you who previously opted out (if they still qualify for auto-enrolment) <- this is one point many owners miss!

Seasonal Workers

Most salons & barbershops take on summer and Christmas temps and these “seasonal workers” also have to be assessed to see if they qualify for auto-enrolment.

However, if you know they will be working for your salon for less than three months, you can use what’s called “postponement” to postpone your legal duty to assess staff for three months – and you do not need to put them into your pension scheme (unless they ask to).

When else can you postpone?

There are 3 other times you can postpone auto-enrolling for 3 months:

  1. If you’re a new employer
  2. A staff member’s first day of employment (good especially if they’re on a probation period)
  3. When an existing employee first becomes eligible for auto-enrolment

In each case, you must let the employee know, but be aware that if they want to opt in (and if they’re eligible) you have to honour this.

Who else does not need to be auto-enrolled?

The following can also be excluded by you from auto-enrolment:

  • Those in a notice period to leave
  • Those who have already voluntarily come out of a pension scheme in the 12 months before the auto-enrolment duty arises

Who can advise you on what pension scheme to set up?

Like the majority of accountants, Salonfrog is not allowed to recommend pension schemes to its Clients. Instead, you have 2 options:

  • Join one of the Government ones (which most of our Clients do): Nest, Now or People’s Pension
  • Ask an IFA

Last words

OK, it’s complicated. So if nothing else:

  1. Build it into your new staff process
  2. Postpone whenever you can
  3. Build it into your payroll process (especially the trigger process)

And don’t think it will go away. There’s some serious fines out there for not doing it.

The Pension Regulator has a good guide here:

https://www.thepensionsregulator.gov.uk/en/employers

Or answer a few questions using the Regulator’s on line help tool:

https://www.thepensionsregulator.gov.uk/en/employers/new-employers

Salonfrog services

We have 3 services which are related to auto-enrolment:

  1. As part of our auto-enrolment bolt-on service, we offer a one-off fixed fee to help you set up your scheme, once you’ve chosen which pension provider you want to use.
  2. Included in our payroll service, we calculate the pension contributions of you and your staff each pay run; letting you know how much you need to pay each time to your pension provider.
  3. As part of our pension admin bolt-on service, we take care of updating your Pension provider for you after each pay run.
  • Posted on September 19th, 2019 in General

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