Resources & tools
The main tax rates and limits for 2015/16 and 2016/17
Rate or limit | 2015/16 | 2016/17 | Notes |
---|---|---|---|
Class 2 NI | £2.80 | £2.80 | Self-employed NI per week |
Class 2 NI small earnings limit | £5,965 | £5,965 | Exempt from Class 2 NI if annual earnings below limit |
Income Tax personal allowance | £10,600 | £11,000 | Tax free allowance - age under 65 |
Basic rate band | £31,785 | £32,000 | Income charged at basic rate |
Higher rate band start | £31,786 | £32,001 | Starting point for higher rate |
Higher rate band top | £150,000 | £150,000 | Top of higher rate band |
Basic rate | 20% | 20% | Tax rate on income in basic rate band |
Higher rate | 40% | 40% | Tax rate on income in higher rate band |
Additional rate | 45% | 45% | Tax rate on income exceeding higher rate band |
Class 4 NI lower profit limit | £8,060 | £8,060 | Self employed charged on profits above this limit |
Class 4 NI upper profit limit | £42,385 | £43,000 | Charged at a lower level on profits above this limit |
Class 4 NI rate (1) | 9% | 9% | NI rate between lower & upper limits |
Class 4 NI rate (2) | 2% | 2% | NI rate on profits above upper limit |
VAT registration limit | £82,000 | £83,000 | Register if turnover exceeds limit in last 12 months |
VAT standard rate | 20% | 20% | |
VAT fraction | 1/6 | 1/6 | VAT element of VAT inclusive amount |
Business expenses that you’re allowed to take away from your income before your income tax is worked out.
Customs & ExciseThe arm of HMRC which deals with VAT as well as custom duties
HM Revenue & CustomsAka the taxman. Formed in 2005 from the amalgamation of HM Customs & Excise with the Inland Revenue.
Income taxThe main tax on income. The more you earn the more you pay.
Inland RevenueThe arm of HMRC which deals with Income Tax, NIC and Tax Returns.
IR35An Inland Revenue Press Release about stopping people who are really employed from setting up limited companies so as to get the tax advantages of self- employment. The computer industry is obsessed with IR35. But it is of no relevance whatsoever to independent escorts.
National Insurance (NIC)Really a form of income tax though the government likes to pretend it’s an insurance you pay in return for getting various state benefits and use of the NHS
Overlap reliefIf you do your business accounts each year to a date other than 31 March (strictly 5 April) then some of your income will get taxed twice in the first 2 years of your business. But when the business ends the overlap period will be taken off your final year’s profits.
Tax avoidanceThis is legal – arranging your affairs so you pay less tax
Tax evasionAnd this is not legal – usually involves lying or cheating
TurnoverThe total money you receive from your clients. Basically income before subtracting any of your expenses.
VATValue Added Tax – a nasty European inspired tax
VAT Input taxThe VAT you pay on the goods and services you buy into your business. If you buy £120.00 of massage oils then £20.00 of it is VAT input tax which you could get back if you were VAT registered and the oils were all for business use.
VAT Output taxIf you’re VAT registered this is the VAT you charge on services you supply out to your clients. The client pays you the tax which you effectively collect on behalf of the government. NB Nothing to do with incall and outcall!
Hi, I notice your Tax calculator is missing. I also use this and do hope it will be back soon 🙂
Hi Emma
I’m sorry you couldn’t find the tax calculator. The page was there but maybe not easy enough to locate. I’ve now added it to the menu at the top of the page as well. If you still have problems please shout.
The calculator does need updating for the new tax year, and I will get that done very shortly.
Thanks for your comment and I’m glad you find the calculator useful.