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!