Beauty & the Budget: What’s Next for the Industry?

The recent Autumn Budget, presented by Chancellor Rachel Reeves, has set the stage for major economic shifts, marking the first budget from the Labour Party in 14 years. With a focus on economic stability and public investment, the measures announced are poised to reshape the beauty and personal care industry.

We’ve rounded up a closer look at what’s to come—and what it might mean for brands and consumers in the months ahead.

A Historic Moment for the UK Economy

Making history as the UK’s first female Chancellor, Rachel Reeves unveiled a bold plan centered around the mantra: “invest, invest, invest.” Taxes are set to rise by £40 billion to fund improvements in public services and local councils, with new reforms targeting businesses across all sectors—including beauty.

What changes are coming into effect?

Among the biggest talking points for the beauty industry are changes to business rate relief and National Insurance contributions:

• Business Rate Relief Reduced: From April 2025, professional beauty services and retailers will see business rate relief drop from 75% to 40%. While there is support available (capped at £110,000 per business), the change has sparked concern across the industry, with many calling for relief to be continued.
• National Insurance Contributions Increase
  Employers’ National Insurance contributions will rise from 13.8% to 15%. Though some financial aid is available for smaller businesses, this hike will undoubtedly place additional pressure on the beauty businesses already managing tight margins.

The Road Ahead

While the government has published draft legislation to permanently cut business rates for retail hospitality and leisure properties from 2026 – these changes won’t arrive in time to offset the challenges in the immediate term.

With taxes increasing and economic pressure mounting, the premium beauty market could face a slowdown. As noted by Cosmetics Business, “For the beauty market, particularly the premium segment, this could mean reduced spending for the next year”. With reduced disposable income leading to more cautious spending in 2025, the trickle-down impact of this could see the affordable and mid-market beauty brands observing an uptick in demand as shoppers pivot toward cost-effective alternatives.

The British Beauty Council have been lobbying for industry change, calling for the continuation of rates relief, along with continuing to push for the introduction of VAT reclaim schemes for green purchases and the reintroduction of tax-free shopping for overseas visitors. Find out how you can support them here.

For more information about the Autumn Budget—read the full statement here.