Resources

In this section we’ve brought together some resources you might find useful. There’s a jargon-buster to help you understand tax-speak, a table showing the tax rates and limits for this year (2021/22) and last year, and a tax calculator to help you estimate how much tax to set aside.

Calculate your tax bill

Get a quick estimate of your tax and be sure you’re setting aside enough each month to cover your future tax bills. There is an easy to use calculator for the current and previous tax years.

Tax calculator

Organise your bookkeeping

Get your bookkeeping organised and protect yourself against a tax investigation with the TaxRelief Diary, our no-nonsense, stress-free solution to your bookkeeping – now in its 14th edition.

TaxRelief Diary

The main tax rates and limits for 2020/21 and 2021/22

Rate or limit2020/212021/22Notes
Income Tax personal allowance£12,500£12,570Tax free allowance - age under 65
Basic rate bandUp to £35,500Up to £35,700Income charged at 20%
Higher rate band£35,501 to £150,000£35,701 to £150,000Income charged at 40%
Additional rateOver £150,000Over £150,000Income charged at 45%
Class 2 NI£3.05£3.05Self-employed NI per week
Class 2 NI small earnings limit£6,475£6,515Exempt from Class 2 NI if annual earnings below limit
Class 4 NI main£9,500 to £50,000£9,568 to £50,270Self employed profits charged at 9%
Class 4 NI upperOver £50,000Over £50,270Charged at 2%
VAT registration limit£85,000£85,000Register if turnover exceeds limit in last 12 months
VAT standard rate20%20%VAT rate on most sales
VAT fraction1/61/6VAT element of VAT inclusive amount
In the UK (but probably nowhere else in the civilized world) tax years run from 6 April and end the following 5 April. So the current tax year 2021/22 started on 6 April 2021 and will end on 5 April 2022.

This table does not include the special tax rates that apply to savings income and dividends.

The NI and VAT rates apply throughout the UK. However the income tax rates apply on in England, Wales and Northern Ireland. Scotland has a more complex system of 5 income tax bands instead of 3.

Tax jargon buster

Allowable expenses

Business expenses that you’re allowed to take away from your income before your income tax is worked out.

Customs & Excise

The arm of HMRC which deals with VAT as well as custom duties

HM Revenue & Customs

Aka the taxman. Formed in 2005 from the amalgamation of HM Customs & Excise with the Inland Revenue.

Income tax

The main tax on income. The more you earn the more you pay.

Inland Revenue

The arm of HMRC which deals with Income Tax, NIC and Tax Returns.

IR35

An 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 including the state retirement pension

Overlap relief

If 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 avoidance

This is legal – arranging your affairs so you pay less tax

Tax evasion

And this is not legal – usually involves lying or cheating

Turnover

The total money you receive from your clients. Basically income before subtracting any of your expenses.

VAT

Value Added Tax – a nasty European inspired tax

VAT Input tax

The 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 tax

If 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!