Question on Tax

shameless-about-money

Having been self-employed for over 25 years I am now going into working for an employer and the payments/tax have me puzzled

The job carries a basic salary + commission. The taxable rate will be 40%.

The salary will be taxed on PAYE.

What about the £500 per month payment towards a car, and the £75 per month payment towards a mobile phone? Are they included as taxable income? What about the 20p per mile for fuel? Is that taxed too?

Is the commission taxed before I get it, or will I be required to pay the tax on the commission myself?

Would be grateful for the answers, please, if anyone can help me out??

Thanks!

LittleWoman_3

shameless-about-money wrote:

What about the £500 per month payment towards a car, and the £75 per month payment towards a mobile phone? Are they included as taxable income? What about the 20p per mile for fuel? Is that taxed too?

Is the commission taxed before I get it, or will I be required to pay the tax on the commission myself?

The £500 per month is added to your basic salary for tax & NIC purposes - so should the £75pm toward your mobile bill (although they may not - which is not correct). You can claim all your business calls on a tax form if you can itemise them so you can claim tax relief for them. Its a pity you couldn't get a mobile from the company - it would be 100% tax free, as long as it is in the company name - but I suppose they don't want to let you run up any large bills.

The 20p for fuel is tax free, and you can claim an additional 20p per mile (up to 10,000 miles) and 5p per mile thereafter for tax relief. When I used to look after a payroll like this, if they staff completed monthly records to prove the business use - I would make the tax free adjustments for them. But not all Payroll staff will do it.

Commission is income and also added to you salary for tax & NIC purposes.

LittleWoman_3

Just to mention - I have seen companies pay these "extras" tax free, then add them to a P11'd and then the individual gets a big tax bill at a later date - or the company get a big tax bill - if they don't put it on the P11d and are "found out" in a Payroll inspection.

shameless-about-money

Thanks for that, most informative!

I do hope that they pay the tax for me, it would be nice not to have to bother with it any more!

I have to submit a mileage sheet monthly, which will have the round-trip mileage on it for my fuel payment.

Great!