How many apprentices would a 10% VAT rate actually buy?

The claim is simple: cut VAT on salon services from 20% to 10% and salons will be able to afford apprentices again. The arithmetic is also simple, and it has never been published by the people making the claim. So here it is. Every figure comes from HMRC VAT returns or ONS business statistics for SIC 96020, held in our data archive. The sliders are yours: set every assumption in the sector's favour if you like, and see where the number lands.

The same calculation by region

HMRC's 2023-24 VAT returns by region give the average turnover of a registered salon in each part of the UK. Applying your assumptions above to each average shows what the cut is worth to a typical registered salon in that region, and whether it reaches the cost of one apprentice.

Region	Registered salons	Average turnover	Retained saving, average salon	Whole apprentices	Pooled ceiling

Regional figures are HMRC VAT registration data for 2023-24 (FOI2026/87008) regardless of the basis selected above; the regional table is not available on the ONS basis. "Whole apprentices" is what the average salon in that region could fund from its own retained saving. "Pooled ceiling" is the region's total saving divided by the apprentice cost — the theoretical maximum if the money could flow to wherever an apprentice was.

How the calculation works

A VAT-registered salon charging £120 gross for a service today keeps £100 and sends £20 to HMRC. At a 10% rate with the price unchanged, it keeps £109.09 and sends £10.91. The retained gain is 9.09% of current net services turnover. If some of the saving is passed to customers as lower prices, the salon keeps proportionately less and the customer gets the rest; the Treasury's cost is broadly the same either way.

The calculator multiplies each basis's total turnover by the services share and by 9.09%, reduces it by the pass-through share, and divides what remains by the apprentice cost. The per-salon figures do the same for the average turnover. The turnover a salon needs to fund one apprentice is the apprentice cost divided by the retained-gain rate: at the default settings, a salon needs roughly £177,000 of turnover before the cut covers one apprentice's first year — and about 40% of registered salons are below that.

• It is a ceiling, not a forecast. Every setting assumes the salon spends its saving on the thing being measured. The sector's own survey names three uses for the same money.
• It counts only registered salons. Roughly 71% of formal hair and beauty businesses are below the VAT threshold and receive nothing from a rate cut. They employ around a third of the sector's employees.
• It ignores the threshold ask. The Salon Employers Association separately campaigns to cut the registration threshold to around £30,000, which would bring most of those businesses into VAT to help fund the rate cut for the rest.
• The direct-grant comparison is illustrative. It shows what the same Treasury cost would buy if paid only on hiring, at whatever grant level you set; it is not a policy proposal.