While escorting is legal in the UK, it would be advisable to be cautious about the way in which you describe your line of work to the authorities when you file tax returns. There are several things about the profession, which can get you into trouble with HMRC. This is because no 3rd party is allowed to profit from sex work for example (such as a pimp, escort agency owner, etc).
If you’re working as an escort in the UK, at some point you will want to consider speaking to a solicitor. Consultations are not expensive and they will reveal important details into operating as a Self-Employed entity.
All income you make needs to be declared to the Inland Revenue
But if you work for an agency – you will work on a contract basis and taxes are automatically deducted. You shouldn’t be paying either if your earnings are under £115 per week. If you don’t have a tax code, your employer has to deduct tax and national insurance from the full amount of your pay. You can ask them for details of the tax office they deal with, then write to the tax office and ask them to give you a tax code. You need to disclose any other income you may have. Once you’ve got a tax code, your employer will give you back any tax he’s collected since 6th April. If you’ve been working for longer than that, you need to apply to the tax office for earlier refunds.
Be aware that tax returns are the only proof of income you have if you’re self-employed and paid mostly, if not entirely, in cash. Now, let’s look in details at how to pay taxes if you are an escort in UK.
Proof of Identification
All escorts can freely work in the UK as long as they are over the age of 18. Whenever you’re applying to work at an escort agency, you will be asked for a scanned copy of your passport of driving licence to confirm you’re of legal age. Contracting and/or promoting an underage escort is a serious offence and can lead to prosecution for trafficking a minor under UK law.
Proof if identity is also required if you are from outside the European Union and intend on working in the UK. Even after Brexit, members of the European Union can travel and work freely in England, Wales, Scotland and Ireland. Residents of countries from outside the EU are required to have a work permit in order to work as an escort in the UK. If an agency has escorts without a work permit, technically this also falls under the trafficking laws. In short, you need to avoid both of these two areas as they can pose the most serious offences in the UK escort laws.
Registering with HMRC
Any individual or company operating in the UK need s to register as a business. This can either be as self employed, a sole trader, partnership or limited company depending on what makes sense financially. If you intend on employing others like a personal assistant or secretary to make appointments then it’s best to register as a limited company. You will find more information regarding the different types of businesses on the HMRC website. Like any other legitimate business you will need to pay your taxes. All of your income that has been made on the territory of the UK is taxable and must be declared to the tax authorities. Escorting is a very cash driven industry but don’t let this deter you from running your business as legitimately as possible. Don’t be fooled into thinking that just because it’s a cash industry you can keep all the cash a secret from the government. This may actually get you in trouble with the CPS (Crown Prosecution Service) who will then hand you over to Inland Revenue.
But would you want to stay away from Inland Revenue? It’s really simple. If you are convicted of an offence the CPS will now hand you over to Inland Revenue to prosecute you for tax evasion. At this point you will need to declare a sum of money you have made so far as an escort agency owner. They will not care what your reasons for failing to do were and here is their calculation to work out how much money you have made.
Below is an example:
You have been escorting for 2 years (730 days). You work 7 hour days and charge £50 per hour. 730 days X 7 hours X 50 pounds = £787,000. They can say that’s how much you made as a self-employed individual and they will tax you on this sum of money. It’s not feasible that you were booking every hour for this time but that does not matter at this stage because you have already broken the law and you have no credibility whatsoever. You will probably won’t be able to pay this tax bill, and they will sell off all your assets and leave you with a big debt hanging over your head making it difficult to ever run another business without them coming after you. The example above is a bit extreme but there have been several instances in recent years, where escorts in the UK have been sued and jailed for tax evasion.
In 2013 a £1000-a-night call girl who was jailed for tax evasion while escorting and she had to sell her Knightsbridge in bid to repay £175,000 court order or face a jail term of two-and-a-half years.
Need more advice? Keep on reading this blog!
So you can see how important it is to pay your taxes in full and on time if you work as an escort in the UK. Be smart and responsible when it comes to how you run your business.