Tax on commission

jay_w_uk

My wife has just been offered a job which pays commission bonuses for targets achieved etc.

Just wondered if there is a general rule of thumb for working out what you will actually earn after tax. Is it just a case of subtracting around 33% - ie take home pay on £100 commission would be £67?

theculverhouses

hiya,

Here are two fairly general rules:

1) If you are a basic rate tax payer - 2008/9 total income of £41,435 (all interest etc) then it'll be 22% tax and 11% NIC = 33%

2) If you are a higher rate tax payer - 2008/9 over £41,435 then it'll be 40% tax and 1% NIC = 41%.

However, if you normally earn £24,000 per annum and get a commission bonus of £30,000 all at once in one month then you'll need to use a mixture of the two and the NIC won't quite work. If she's a director of the company the NIC will all work it's way out by year end but assuming she's not then she'll get £32,000 in that month taxed as normal but the NIC would be 11% on the first £3,336 and then 1% after that. If in doubt there are normally sites online you can put figures in.

However,
- assumes no pension contributions made as a normal element of salary
- assumes not contracted out of S2P (SERPS as it was)