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.
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.
The main tax rates and limits for 2020/21 and 2021/22
|Rate or limit||2020/21||2021/22||Notes|
|Income Tax personal allowance||£12,500||£12,570||Tax free allowance - age under 65|
|Basic rate band||Up to £35,500||Up to £35,700||Income charged at 20%|
|Higher rate band||£35,501 to £150,000||£35,701 to £150,000||Income charged at 40%|
|Additional rate||Over £150,000||Over £150,000||Income charged at 45%|
|Class 2 NI||£3.05||£3.05||Self-employed NI per week|
|Class 2 NI small earnings limit||£6,475||£6,515||Exempt from Class 2 NI if annual earnings below limit|
|Class 4 NI main||£9,500 to £50,000||£9,568 to £50,270||Self employed profits charged at 9%|
|Class 4 NI upper||Over £50,000||Over £50,270||Charged at 2%|
|VAT registration limit||£85,000||£85,000||Register if turnover exceeds limit in last 12 months|
|VAT standard rate||20%||20%||VAT rate on most sales|
|VAT fraction||1/6||1/6||VAT element of VAT inclusive amount|
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
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.
The main tax on income. The more you earn the more you pay.
The arm of HMRC which deals with Income Tax, NIC and Tax Returns.
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
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.
This is legal – arranging your affairs so you pay less tax
And this is not legal – usually involves lying or cheating
The total money you receive from your clients. Basically income before subtracting any of your expenses.
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!