1. OVERVIEW
Data Summary
Data Coverage
Q1 2007 - Q1 2026
19+ years of data
VAT at 9%
2011-2019 (8 years)
2020-2023 (3 years)
Employment Peak
2022 Q3
During 9% VAT period
Current (2025 avg)
At 13.5% VAT
(Q1 2026 alone: 31.2k, one quarter only)
Self-employed share (2025)
Up from 25% in 2007
Rose under both 9% and 13.5% VAT
Key Observations:
- Ireland maintained 9% VAT for hairdressing services for 11 years total across two periods
- Employment reached its peak levels during the 9% VAT periods (2018 and 2022)
- Employment shows high quarterly volatility at all VAT rate levels
- Budget 2026 reduced VAT to 9% again, effective 1 July 2026 (9-month delay from announcement)
- New: a CSO data request now provides the self-employed vs employee breakdown for the sector (Section 3B). The self-employed share has risen steadily from ~25% (2007-2018) to ~37-41% (2020-2026) — but the rise straddles both 9% and 13.5% VAT periods and does not reverse when VAT goes up, undermining claims that VAT direction alone drives the shift toward self-employment
- New: Section 6 tests whether VAT rate changes are actually passed through to customer prices, using an independent Irish Fiscal Advisory Council study. For hairdressing specifically, the evidence shows VAT increases get passed to customers reliably (70-74%) — but there is no equivalent clean evidence that cuts are passed through, raising real doubt about who a rate cut actually benefits
- New: Section 7 tests the British Hair Consortium's claim, made in its July 2025 submission to the Business and Trade Committee (SBS0055), that Ireland "lowered the VAT threshold" and this "resulted in 32% growth in employment and tax receipts". Ireland's VAT threshold has never been lowered — it has only ever been raised — and the 32% figure is unsourced and untraceable to any dataset
2. VAT RATE TIMELINE
Complete History 2011-2026
| Period | VAT Rate | Duration | Context |
|---|---|---|---|
| Pre-July 2011 | 13.5% | - | Standard reduced rate |
| July 2011 - Jan 2019 | 9% | 7.5 years | Post-financial crisis support |
| Jan 2019 - Nov 2020 | 13.5% | 1.8 years | Return to standard rate |
| Nov 2020 - Sept 2023 | 9% | 2.8 years | COVID-19 temporary relief |
| Sept 2023 - July 2026 | 13.5% | ~3 years | Current rate |
| July 2026 onwards | 9% | Permanent | Budget 2026 announcement |
Budget 2026 Implementation Timeline
| Event | Date | Details |
|---|---|---|
| Budget announcement | October 8, 2025 | VAT cut to 9% announced for hospitality and hairdressing |
| Implementation date | July 1, 2026 | Rate change takes effect |
| Delay period | 9 months | Time between announcement and implementation |
| Annual cost | €681 million | Full-year cost of VAT reduction across all affected sectors |
3. EMPLOYMENT DATA
Source & Classification
Source: Irish Central Statistics Office (CSO) Labour Force Survey
Occupation Code: 622 (Hairdressers and related services)
Coverage: Q1 2007 through Q2 2025
Measurement: ILO employment definition
Annual Employment 2007-2025
| Year | Employment (000s) | Annual Change | Change from 2010 | VAT Rate |
|---|---|---|---|---|
| 2007 | 23.0 | - | - | 13.5% |
| 2008 | 24.2 | +5.2% | - | 13.5% |
| 2009 | 24.7 | +2.1% | - | 13.5% |
| 2010 | 22.6 | -8.5% | Baseline | 13.5% |
| 2011 | 21.6 | -4.4% | -4.3% | 9% from July |
| 2012 | 22.2 | +2.8% | -1.4% | 9% |
| 2013 | 23.1 | +4.1% | +2.2% | 9% |
| 2014 | 23.5 | +1.7% | +4.0% | 9% |
| 2015 | 23.9 | +1.7% | +6.0% | 9% |
| 2016 | 25.7 | +7.5% | +13.8% | 9% |
| 2017 | 25.7 | 0.0% | +13.8% | 9% |
| 2018 | 27.9 | +8.6% | +23.7% | 9% |
| 2019 | 27.1 | -2.9% | +20.2% | 13.5% from Jan |
| 2020 | 22.4 | -17.3% | -0.7% | 13.5%/9% |
| 2021 | 22.0 | -1.8% | -2.4% | 9% |
| 2022 | 27.5 | +25.0% | +21.9% | 9% |
| 2023 | 25.6 | -6.9% | +13.6% | 9%/13.5% |
| 2024 | 25.9 | +1.2% | +14.9% | 13.5% |
| 2025 (Q1-Q2) | 26.6 | - | +17.9% | 13.5% |
Key Metrics by VAT Period
| Period | VAT Rate | Avg Employment | Peak | Low | Volatility (CV) |
|---|---|---|---|---|---|
| 2007-2010 | 13.5% | 23.6k | 24.7k (2009) | 22.6k (2010) | 3.7% |
| 2011-2018 | 9% | 24.2k | 27.9k (2018) | 21.6k (2011) | 9.2% |
| 2019-early 2020 | 13.5% | 27.2k | 27.7k (2020 Q1) | 25.9k (2019 Q4) | 3.1% |
| 2020-2023 | 9% | 24.8k | 29.9k (2022 Q3) | 16.2k (2020 Q2) | 13.7% |
| 2023-2025 | 13.5% | 25.9k | 27.7k (2024 Q1) | 24.0k (2024 Q3) | 5.4% |
CV = Coefficient of Variation (standard deviation / mean × 100)
Employment Peaks and Trends
| Metric | Value | Period | VAT Rate |
|---|---|---|---|
| Peak (annual average) | 27.9k | 2018 | 9% |
| Peak (quarterly) | 29.9k | 2022 Q3 | 9% |
| Current (2025 Q2) | 25.6k | 2025 Q2 | 13.5% |
| Change from 2018 peak | -8.2% | - | - |
| Change from 2022 peak | -14.4% | - | - |
3B. SELF-EMPLOYED VS EMPLOYEE BREAKDOWN
Until 2026, the self-employed/employee split for Irish hairdressing employment was not available from published CSO tables — the headline figures in Section 3 are the total across all employment statuses. A direct CSO data request (Table: Employment by Status of Employment, SOC-10 622, Q1 2007 - Q1 2026) has now provided this breakdown, and it directly tests claims that VAT cuts specifically drive a shift toward self-employment.
Annual Self-Employed vs Employee Split (000s)
| Year | All self-employed | Employee | Total employment | Self-employed share | VAT rate |
|---|---|---|---|---|---|
| 2007 | 5.9 | 17.1 | 23.0 | 25.5% | 13.5% |
| 2010 | 5.7 | 16.7 | 22.6 | 25.5% | 13.5% |
| 2011 | 5.5 | 15.9 | 21.6 | 25.6% | 9% from July |
| 2014 | 7.6 | 15.8 | 23.4 | 32.4% | 9% |
| 2018 | 6.7 | 21.2 | 27.9 | 24.2% | 9% |
| 2019 | 7.7 | 19.3 | 27.1 | 28.4% | 13.5% from Jan |
| 2020 | 7.3 | 14.9 | 22.4 | 32.8% | 13.5%/9% |
| 2021 | 8.9 | 13.7 | 22.0 | 40.6% | 9% |
| 2022 | 11.1 | 16.4 | 27.5 | 40.3% | 9% |
| 2023 | 8.8 | 16.7 | 25.6 | 34.4% | 9%/13.5% |
| 2024 | 10.6 | 15.1 | 25.9 | 41.1% | 13.5% |
| 2025 | 10.2 | 17.1 | 27.6 | 37.1% | 13.5% |
| 2026 (Q1 only) | 11.4 | 19.7 | 31.2 | 36.4% | 13.5% |
Self-Employed Share by VAT Regime
| VAT regime | Quarters | Avg self-employed share |
|---|---|---|
| 13.5% (pre-2011) | 18 | 25.0% |
| 9% (2011-2019) | 30 | 28.1% |
| 13.5% (2019-2020) | 7 | 30.5% |
| 9% (2020-2023) | 10 | 38.6% |
| 13.5% (2023-2026) | 11 | 37.7% |
What this shows:
- The self-employed share rises continuously across the whole series, from ~25% in 2007-2010 to ~37-41% in 2020-2026 - regardless of whether VAT was 9% or 13.5% in a given period
- The clearest inflection point is 2020-2021, coinciding with COVID-19, not a VAT change - self-employed share jumped from 27.1% (2019, 13.5%) to 40.6% (2021, 9%), but that period also saw a sector-wide shift toward gig/mobile self-employment across the Irish and UK economies
- Critically, when VAT rose back to 13.5% in September 2023, the self-employed share did not fall back - it averaged 38.6% under 9% VAT (2020-2023) and 37.7% under the following 13.5% period (2023-2026), a difference well inside normal quarterly noise. By 2024 Q3 it hit a series-high of 47.2%, over a year after the VAT increase
- This pattern is inconsistent with a simple "VAT cut increases self-employment, VAT rise reduces it" causal story - see Section 7 for how this bears on the BHC/SEA submission to the Business and Trade Committee
Note: CSO suppresses small cells - the "self-employed with employees" sub-category is not separately published from 2016 onward, though the "all self-employed" total still includes it. 2026 shown is Q1 only and should not be read as an annual average.
4. EMPLOYMENT TREND ANALYSIS
Impact of 2011 VAT Cut (13.5% → 9%)
| Time Period | Employment Change | Notes |
|---|---|---|
| Immediate (2010-2011) | -4.3% | Employment declined in the VAT cut year |
| Two years (2010-2012) | -1.4% | Continued decline through 2012 |
| Five years (2010-2015) | +6.0% | Gradual recovery and modest growth |
| Eight years (2010-2018) | +23.7% | Full period at 9% VAT - gradual growth |
Impact of 2019 VAT Increase (9% → 13.5%)
| Metric | 2018 (9% VAT) | 2019 (13.5% VAT) | Change |
|---|---|---|---|
| Annual average employment | 27.9k | 27.1k | -2.8% |
| Q4 2018 (last quarter at 9%) | 28.3k | - | - |
| Q1 2020 (pre-COVID at 13.5%) | - | 27.7k | -2.1% |
Quarterly Volatility by VAT Rate
Employment shows significant quarterly variation regardless of VAT rate. The coefficient of variation (CV) measures this volatility:
- 9% VAT (2011-2018): CV = 9.2% (moderate volatility)
- 13.5% VAT (2019-early 2020): CV = 3.1% (low volatility)
- 9% VAT (2020-2023): CV = 13.7% (high volatility, includes COVID)
- 13.5% VAT (2023-2025): CV = 5.4% (moderate volatility)
High volatility occurred during both 9% and 13.5% periods, suggesting factors other than VAT rate drive employment fluctuations.
Long-Term Trends
Key Observations:
- Employment reached peak levels (27.9k annual, 29.9k quarterly) during 9% VAT periods
- Current employment (25.6k) is 8.2% below the 2018 peak despite having had extended periods at 9% VAT
- The 2010-2018 growth period (23.7%) coincides with Ireland's economic recovery from the financial crisis
- Employment declined 4.3% in 2011, the year of VAT reduction to 9%
- Growth during 2011-2018 was gradual and volatile, not immediate
- The 2019 VAT increase (9% → 13.5%) resulted in 2.8% decline, relatively modest
- COVID-19 caused a 17.3% decline in 2020, but recovery exceeded pre-pandemic levels by 2022
5. IRELAND VS UK COMPARISON
Population-Adjusted Employment Levels
| Country | Population | Employment | Per 100k Population | VAT Rate | VAT Threshold |
|---|---|---|---|---|---|
| Ireland (2025 Q2) | 5.1 million | 25,600 | 502 | 13.5% | €42,500 (~£36k)* |
| UK (2022-23) | 67 million | 398,000* | 594 | 20% | £90,000 |
| Difference | 13.1x larger | - | UK +18% higher | UK +6.5pp | UK +£59k |
*UK total = PAYE (188k) + Self-employed (210k). Ireland's services threshold was €37,500 from 2008; it rose to €40,000 (1 Jan 2024) and €42,500 (1 Jan 2025) - it has never been lowered. See Section 7 for why this matters.
VAT Rate Comparison
| Country | Current Rate | Historical Rates | Recent Changes |
|---|---|---|---|
| Ireland | 13.5% | 9% (2011-2019, 2020-2023) | Budget 2026: Cut to 9% (July 2026) |
| UK | 20% | Consistently 20%* | No changes for hairdressing |
*UK temporarily reduced hospitality VAT to 5% (July 2020-Sept 2021) and 12.5% (Oct 2021-March 2022) during COVID, but hairdressing was excluded
Employment Trends Comparison
Ireland
VAT History: Had 9% for 11 years total, currently 13.5%
Recent Trend: Declining from peaks reached during 9% periods
Key Metrics:
- Peak: 29.9k (2022 Q3) at 9% VAT
- Current: 25.6k (2025 Q2) at 13.5% VAT
- Change: -14.4% from peak
Planned Action: Cut to 9% in July 2026 (9-month delay)
UK
VAT History: Consistently 20% for hairdressing
Recent Trend: PAYE declining, self-employment growing
Key Metrics:
- PAYE: 188k (-6.5% from 2018-19)
- Self-employed: 210k (+11.1% from 2018-19)
- Total: 398k (+2.1% overall)
Pattern: Shift from employment to self-employment
Parallel Patterns
Both Ireland and UK show:
- High quarterly volatility in employment figures
- Challenges in maintaining peak employment levels
- Structural changes in workforce composition
- Similar patterns despite significantly different VAT rates and thresholds
Self-Employment Context
| Country | Self-Employment Rate | Data Source |
|---|---|---|
| UK | 53% (2022-23) | HMRC FOI data |
| Ireland | 37% (2025 avg), up from 25% (2007-2010) | CSO custom data request (SOC-10 622) |
| International range | 34-62% | Eurostat/OECD (various countries) |
Both countries show a long-run shift from PAYE/employee status toward self-employment, though Ireland's self-employed share remains well below the UK's. In Ireland, this shift is continuous across both 9% and 13.5% VAT periods and does not reverse when VAT rises - see Section 3B for the full breakdown and Section 7 for what this means for VAT-driven causal claims.
6. VAT PASS-THROUGH: WHO ACTUALLY BENEFITS FROM A RATE CHANGE?
VAT is designed as a consumption tax - the policy intent is that it ultimately falls on the end customer, through the price they pay. But VAT law does not require this: nothing compels a business to pass a rate change through to its prices. Whether a cut benefits the customer (lower prices) or the business (retained as margin) is an empirical question, not a legal certainty - and it is answerable with real price data.
This section draws on an independent academic study, not industry-commissioned research: Killian Carroll, "VAT rate changes and pass-through: Evidence from the Irish hospitality and tourism industry," Irish Fiscal Advisory Council Working Paper No. 27 (October 2025). The paper uses a difference-in-difference event-study design, comparing Irish prices to UK prices for the same services as a counterfactual, across all four Irish hospitality VAT rate changes since 2011 - two cuts (2011, 2020) and two increases (2019, 2023). Hairdressing is one of the specific sub-categories the paper isolates.
Hairdressing-specific pass-through, where the data allows a clean estimate
| VAT change | Direction | Hairdressing pass-through | Note |
|---|---|---|---|
| 2011 (13.5% → 9%) | Cut | Not estimable | Clear pre-existing seasonal price trends in hairdressing made a causal estimate impossible |
| 2019 (9% → 13.5%) | Increase | 74% | Prices rose 2.6% immediately, 3% in aggregate |
| 2020 (13.5% → 9%) | Cut | Not estimable | COVID-19 closures meant only takeaway food prices could be tracked for this event |
| 2023 (9% → 13.5%) | Increase | 70% | Prices rose 2.2% immediately |
Every time hairdressing-specific pass-through could be cleanly measured, it was for a VAT increase - and in both cases, roughly 70-74% of the increase reached customers as higher prices, within one month. There is no equivalent clean measurement of a hairdressing-specific VAT cut being passed through - both cut events happened to coincide with data problems (seasonality in 2011, COVID-19 closures in 2020) that made hairdressing inestimable for those events specifically.
The wider hospitality sector shows the same asymmetry
| VAT change | Direction | Price impact | Sector-wide pass-through |
|---|---|---|---|
| 2011 | Cut (-4.5pp) | -2% | 50% |
| 2019 | Increase (+4.5pp) | +3.6% | 88% |
| 2020 | Cut (-4.5pp) | -0.2% | 6% |
| 2023 | Increase (+4.5pp) | +1.5% | 36% |
Across the whole hospitality and tourism sector, not just hairdressing, the same pattern holds: cuts passed through at 50% and 6%; increases passed through at 88% and 36%. The paper's own conclusion states this directly:
The ratchet effect
Because increases are passed through more reliably than cuts, a temporary cut followed by a later reversal - which is Ireland's actual 15-year hairdressing VAT history, not a hypothetical - can leave the price level higher than if no change had happened at all. The paper notes this explicitly, and cites comparable findings from Finland's hairdressing VAT history (Benzarti et al. 2020) showing the same asymmetric pattern in a different country's hairdressing sector specifically.
What this means for "the cut is for the customer"
If a rate cut is not reliably passed through, its benefit most likely sits with the business, at least in part, not the customer - directly contradicting any claim that a VAT cut is primarily a customer-facing measure. And when that cut is later reversed, as every Irish hairdressing VAT cut has been reversed at least once, the increase is reliably passed through to the customer. The customer is more exposed to the eventual reversal than they ever were to the original benefit.
Cost of the current cut
The paper also quantifies the fiscal cost, for scale: reducing the hospitality and tourism VAT rate from 13.5% to 9% costs an estimated €0.87 billion a year (2025 terms) - equivalent, in the paper's own comparison, to hiring 11,400 nurses or 7,800 teachers.
Sources
- Carroll, K. (2025). "VAT rate changes and pass-through: Evidence from the Irish hospitality and tourism industry." Irish Fiscal Advisory Council Working Paper No. 27. fiscalcouncil.ie
7. TESTING THE BHC/SEA IRELAND VAT CLAIM
The claim
In its written submission to the House of Commons Business and Trade Committee's Small Business Strategy inquiry (SBS0055, submitted July 2025), the British Hair Consortium - the coalition that includes the Salon Employers Association, the Hair & Barber Council, and other bodies - wrote:
This sentence is used to support BHC's recommendation to lower the UK VAT registration threshold. It carries no footnote, no date range, and no baseline - unlike other claims in the same submission, which cite tribunal cases, named reports, or specific hearings.
Finding 1: the factual premise is backwards
Ireland has never lowered its VAT registration threshold
The Irish services VAT threshold has only ever been raised:
- Set at €37,500 from 1 May 2008
- Raised to €40,000 from 1 January 2024
- Raised again to €42,500 from 1 January 2025
There is no point in Ireland's VAT history where the registration threshold went down. The BHC submission's central Ireland comparator - used to argue the UK should lower its threshold - rests on a claim about Irish policy that is the direct opposite of the documented record (Revenue Commissioners / Oireachtas records, Citizens Information).
Finding 2: the 32% figure is unsourced and untraceable
No dataset produces a clean 32% VAT-driven employment surge
Checked against the CSO data in this analysis:
- Ireland's most recent VAT cut to 9% took effect 1 July 2026 - after the July 2025 submission was written, and only weeks before this page was last updated. It cannot be the source of an already-reported "32% growth" figure. If anything, RTÉ reported a 1.7% employment fall in the wider hospitality sector in the quarter immediately preceding that cut.
- Across the two earlier 9% VAT periods (2011-2019, 2020-2023), total sector employment grew by up to ~24-30% over 7-8 year spans (Section 4) - close to, but never exceeding, 32%, and that growth overlaps almost entirely with Ireland's post-financial-crisis recovery and the COVID employment rebound, not an isolated VAT effect.
- There is no 1-2 year window anywhere in the Q1 2007 - Q1 2026 series where total employment moves by 32% in a way attributable to a VAT change alone.
- Self-employment growth (Section 3B) - the closest read on "moving into a lower-tax model" - does not track VAT direction either: it kept rising after the September 2023 VAT increase and hit a series-high in 2024, over a year after VAT went up.
Assessment
The Ireland comparator in SBS0055 fails on both the fact it asserts (threshold direction) and the statistic it cites (32% growth). Since the threshold claim is independently checkable against Revenue Commissioners policy history regardless of which VAT cut or period is meant, it does not require guessing the intended date range to show it is incorrect. The self-employed/employee breakdown obtained for this page (Section 3B) also weakens the underlying causal mechanism BHC relies on elsewhere in the same submission - that lower VAT reduces the incentive to fragment into self-employed micro-businesses - since Ireland's self-employed share rose fastest in a period when VAT was rising, not falling.
Sources
- British Hair Consortium written submission SBS0055, Business and Trade Committee, Small Business Strategy inquiry (July 2025) - committees.parliament.uk/writtenevidence/143886/pdf
- Irish VAT registration thresholds - Revenue Commissioners / Oireachtas record, 13 July 2023; Budget 2024 and Budget 2025 threshold changes
- RTÉ, "VAT rate to be cut to 9% from 13.5% from midnight" (30 June 2026) - hospitality sector employment context ahead of the July 2026 cut
- CSO custom data request, Table: Employment by Status of Employment, SOC-10 622, Q1 2007 - Q1 2026 (Section 3B, this page)
8. METHODOLOGY & DATA SOURCES
Ireland Employment Data
Source:
Irish Central Statistics Office (CSO) Labour Force Survey
Classification:
Occupation Code 622: Hairdressers and related services
Coverage:
Q1 2007 through Q1 2026 (77 quarters, 19+ years)
Measurement:
ILO (International Labour Organisation) employment definition
Persons aged 15 years and over in employment
Access:
CSO PxStat database: data.cso.ie
Self-employed / employee breakdown (Section 3B):
Sourced via a direct CSO data request: "Table Employment (thousand) in SOC-10 622 (Hairdressers) by Status of Employment, Q1 2007 - Q1 2026", covering self-employed with employees, self-employed without employees, all self-employed, employee, and assisting relative categories. Received July 2026. Small cells are suppressed by CSO in line with their disclosure control policy - "self-employed with employees" is not separately published from 2016 onward, though it remains included in the "all self-employed" total.
Ireland VAT Rate Timeline
Primary Sources:
- Citizens Information - Value Added Tax official guidance
- gov.ie official press releases and announcements
- Irish Department of Finance publications
- Budget 2026 documentation (October 8, 2025)
News Coverage:
- Irish Times
- RTÉ (Irish national broadcaster)
- Professional Beauty Ireland
UK Employment Data
Source:
HMRC (HM Revenue & Customs) via Freedom of Information requests
Classification:
SIC 96020: Hairdressing and other beauty treatment
Components:
- PAYE employment data from Real Time Information
- Self-employment data from Survey of Personal Incomes
FOI References:
- FOI2023/51378 (31 July 2023)
- FOI2024/200347 (30 October 2024)
- FOI2024/15284 (7 March 2024)
Population Data
- Ireland: 5.1 million (CSO 2024)
- UK: 67 million (ONS 2024)
Data Quality & Limitations
Strengths:
- All data from official government statistical agencies
- Consistent methodology maintained across time periods
- Complete population coverage (not sample surveys)
- Tax-based data provides comprehensive coverage
- Long time series enables trend analysis
Limitations:
- CSO suppresses small cells: the "self-employed with employees" sub-category is not separately published from 2016 onward (still included in the "all self-employed" total)
- Quarterly data shows inherent survey volatility
- SIC/Occupation codes may have minor classification differences between countries
- Hair services not separated from beauty services in most datasets
- Under-18 workforce not captured
- Some informal/cash economy activity not measured
- 2026 figures shown are Q1 only and should not be treated as an annual average
Analysis Notes
- Annual figures calculated as mean of four quarters
- Volatility measured using coefficient of variation (CV = standard deviation / mean × 100)
- Per capita figures calculated using mid-year population estimates
- Percentage changes calculated from rounded figures may differ slightly from changes calculated from unrounded data
- COVID-19 period (2020-2021) shows exceptional volatility due to lockdown measures
Data Access
All source data is publicly available:
- Ireland CSO: data.cso.ie
- UK HMRC FOI: Available via Freedom of Information requests
- Analysis files: Available on request
Report Information
Analysis conducted by: SalonLogic Pro / Andrew Clelland
Independent business analyst: UK hair and beauty sector
Date compiled: October 2025
Last updated: August 2026 (VAT pass-through analysis added, Section 6)
Contact: andrew@salonlogic.co.uk