Hairdresser and salon business energy

A salon, barber's, beauty room or dog-grooming studio is a small site with a few very hungry appliances. Bills are usually modest, but the way tax and thresholds work at this size can make a surprising difference. This guide shows what drives the bill and how the small-user rules apply.

What uses the power in a salon

• Hot water. Backwash basins, colour rinsing and towel washing. Heating water is often a large share of the bill, whether by electricity or gas.
• Heat tools. Hairdryers, climazones, straighteners, hooded dryers. Individually short-use, collectively heavy.
• Laundry. Washing machines and tumble dryers for towels and gowns. A tumble dryer used all day can be one of the bigger loads in a small salon.
• Lighting and heating. Bright work lighting, and a warm room for people sitting still.
• Beauty extras. Wax heaters, sterilisers, UV nail lamps, sunbeds and facial equipment.
• Dog grooming. Dryers (high-powered cage and stand dryers), hot water for baths and heating for the room.

Do you need a business contract?

If you operate from a shop unit, yes. If you run a home salon from a converted room or garage, it depends on how the premises are used and what your supplier's terms say. See business vs domestic energy for how to tell. If you rent a chair in someone else's salon, the salon owner holds the contract and may add a charge for energy to your rent; ask how it is calculated. Ofgem's maximum resale price rule protects domestic users only, so for a business arrangement like chair rental the terms you agree with the salon owner are what count.

The small-user rules: why 33 kWh a day matters

Two tax rules help the smallest users:

• If you use no more than an average of 33 kWh of electricity a day (about 1,000 kWh a month), VAT is charged at 5% rather than 20%.
• Electricity supplies below 1,000 kWh a month are treated as domestic for the Climate Change Levy, so the levy is not charged (GOV.UK: exemptions from Climate Change Levy).

(For gas the limits are 145 kWh a day for VAT and 4,397 kWh a month for the levy.) A small, one-room salon with a few chairs can fall under the line; a busier salon with a tumble dryer and a nail bar will not.

Worked example

Use the October 2026 microbusiness averages from a comparison site, 28.4p/kWh and 58p/day (indicative, not an offer). A salon using 11,000 kWh a year is on an average of 11,000 ÷ 365 = 30.1 kWh a day, so it qualifies.

	11,000 kWh (under limit)	14,000 kWh (over limit)
Energy	£3,124.00	£3,976.00
Standing charge 365 × £0.58	£211.70	£211.70
Climate Change Levy	£0.00	14,000 × £0.00801 = £112.14
VAT	5% = £166.78	20% = £859.97
Total	£3,502.48	£5,159.81

The bigger salon uses 3,000 kWh (27%) more but pays £1,657.33 (47%) more. The extra goes to VAT and levy as well as energy. It means that cutting use just below the threshold, for example by replacing a dryer, can lower tax as well as usage. Check your own average using the converter if you have a gas meter, and test the tax with our VAT and CCL calculator. Ask your supplier how it checks the small-user limit and whether it needs anything from you; see the reduced-rate VAT declaration.

The temporary 0% VAT rate on electricity in Great Britain (1 October 2026 to 30 June 2027, extended from HMRC's original end date of 31 March 2027) is for qualifying domestic and charity non-business use; ask your supplier which rate it applies to a small-user business supply rather than assuming you get it. The test is an average over time. A salon that is only just under the line one year and over the next can change tax treatment, so keep a record of your annual usage.

Standing charges bite at this size

For small users the standing charge is a big share of the bill. In the example above, the standing charge of £211.70 is about 6% of the pre-VAT total. When comparing quotes, a lower unit rate with a higher standing charge may be worse for you. Some suppliers offer low or no-standing-charge deals (see no standing charge business energy) with higher unit rates; these only pay off above a certain usage, so do the sum for your kWh.

Cutting costs without compromising service

1. Match the water heater to demand and set a sensible thermostat temperature; insulate the tank and pipes.
2. Use eco cycles on washers and fill the drum; line-dry or share tumble drying where practical.
3. Replace spots and tubes with LEDs. See LED lighting for business.
4. Turn off tools at the wall at closing time.
5. Take a closing and an opening meter reading to find hidden overnight use.

Contracts and protections

Nearly every salon is a microbusiness, which gives you clearer contract terms, a limit on how far back you can be backbilled (12 months), and access to the Energy Ombudsman. There's no cooling-off period, so don't sign by phone until you have seen the rates. Be careful of cold callers; our guide to choosing a broker explains what to ask.

Mobile, home-based and chair-rental set-ups

Mobile hairdressers and groomers

If you travel to clients, you have no premises to put a business contract on. Your own energy is domestic or sits with whoever owns the premises where you work, so there is nothing to switch for the business itself.

Home salon in a garage or outbuilding

A separate outbuilding with its own meter is usually a business supply. If it shares your house meter, the supply is a single contract and the question is whether business use is large enough to change the terms. Read your supplier's terms, and consider a sub-meter or separate supply if the business use is significant. Adding a meter may involve the network operator and a fee.

Renting a chair or room

Ask your landlord in writing whether energy is included in the rent. If they bill you separately, ask for the meter readings and the unit rate they use. Ofgem's resale price cap does not cover business tenants, so get the charging method written into your agreement. If the figures don't add up, see our landlord guide.

Next steps

1. Work out your daily average kWh from the last 12 months of bills.
2. Check your bill's VAT rate and whether the Climate Change Levy appears.
3. Compare the unit rate and standing charge together.
4. Note your contract end date.

Keep a simple monthly log of meter readings next to the till. It takes a minute and lets you spot a faulty appliance or an estimated bill before it costs you.