How to Ensure Your Rent-a-Chair Agreements Are Fully Compliant in 2025

A Practical Guide for Salons and Independent Professionals

The rent-a-chair and room-rental model has become one of the most common ways for salons to operate, giving businesses the ability to reduce payroll overheads while offering stylists and therapists more flexibility and earning potential.

However, when the working relationship is not structured correctly, it becomes one of the highest-risk areas for HMRC enquiry. The concern is straightforward: if a stylist is working as though they are an employee, HMRC can reclassify them as such and backdate tax, National Insurance and penalties.

To help salon owners and independent professionals avoid that risk, the following guideline highlights what genuinely self-employed trading should look like within a salon. These criteria are not legislation, but they are widely recognised indicators of whether a contractor is operating independently or whether an employment relationship exists in disguise. This is HMRC guidance used to interpret the true nature of a working relationship in hairdressing environments.

1. The Contractor Must Be Operating as a Genuine Business

A contractor within a salon should be genuinely self-employed and not simply functioning as an extension of the salon business. In practical terms, they should be able to:

• Maintain their own business records and bookkeeping

• Manage their own tax registrations and HMRC filings

• Hold their own insurance including public or treatment liability

• Make a profit or a loss

• Set their own pricing

• Decide when they open, close or go on holiday

• Purchase their own stock and consumables

• Sell any retail product range they choose

• Work for clients inside and outside the salon

• Decline clients if it does not align with their business

• Appoint cover if needed

• Market themselves under their own name or brand

• Handle complaints relating to their work directly

• Issue their own invoices or receipts

Restrictions around any of these areas increase the likelihood of HMRC seeing that individual as an employee.

2. Access and Trading Autonomy Are Key

Ideally, a contractor should have access to their working space whenever they choose to trade. Although shared premises will naturally have security and safety rules, a genuine business must be able to determine:

• Working hours

• Time away

• Seasonal or promotional trading patterns

If the salon dictates working hours, holiday approval or fixed schedules, it begins to resemble employment.

3. Client Ownership Must Sit With the Contractor

Client ownership is one of the clearest differentiators.

Clients should:

• Know who they are booking with

• Pay that individual’s business

• Direct complaints or claims to the individual

• Hold records assigned to that individual

Best practice is achieved by making this distinction visible through:

• Clearly identified practitioner/therapist names

• Individual pricing lists

• Separate booking pages or profiles

• Independent contact details

Where all clients are grouped solely under the salon’s brand, system or policies, this presents risk.

4. Money Must Belong to the Contractor

Even if a salon collects payments centrally, the earnings for that contractor legally belong to the contractor. This means:

• Funds should be transferred directly to the contractor

• Full breakdowns should be available for each payment period

• Any deductions should be clearly itemised

When the salon pays a fixed weekly or monthly amount that resembles wages, regardless of takings, risk levels increase.

5. The Salon Environment Should Support, Not Control

The salon can provide access to facilities such as utilities, reception support, cleaning or shared products, but these must be clearly defined.

Agreements should set out charges and terms relating to:

• Use of reception

• Laundry

• Booking systems

• Utilities

• Shared equipment

• Shared consumables

• Space rental fees

Where the salon begins to control operational behaviour, appearance, service standards or pricing outside of legal and health requirements, this can create the impression of employment.

6. A Written Agreement Is Critical

There must be a written agreement, and it should reflect what happens in practice. This agreement must clearly outline:

• Roles and responsibilities

• Charges and what they cover

• Notice periods and termination terms

• Insurance requirements

• Client ownership clarity

• Payment mechanisms

• Responsibility for liabilities

If VAT applies to the rental or service charge, this must also be expressly stated.

Final Word for Salon Owners

Rent-a-chair offers a flexible and cost-effective way to run a salon, but only when implemented correctly. HMRC places strong focus on the difference between genuine independent trading and employment disguised as self-employment.

The safest approach is consistent documentation, clear separation between businesses operating under your roof and evidence that each contractor is truly operating as their own enterprise.

If you need support reviewing your current setup or updating contracts, onboarding documents or compliance workflows, our consultancy team can support you with a structured review and implementation plan. Contact us on hello@thebeautyaccountant.co.uk for more.