Payroll and Comissions

A-Vic

just setting up a new payroll for a client who has one employee who is paid a salary with bonuses but also a comission.

Just a quick one can i treat the comission as a part of payroll and put it in the bonuses and taxed at source or is this treated differently?

payrollpro

Hi there,

As with everything, it all depends on the circumstances but I suspect this is a fairly standard arrangement. There is a way of avoiding the taxation at source if the commission is paid by a separate company and it is unrelated to the employment contract you are dealing with now. The problem is it only delays taxation as all commissions are assessible so if the employee avoids it in payroll they still have to deal with it under SA.

If the employer is paying the commission then they have an obligation to PAYE it whether they like it or not. The law says it is taxable income so the only issue is whether the employer can avoid the secondary NIC's and I don't think they can.

Payrollpro

A-Vic

payrollpro wrote: »

Hi there,

As with everything, it all depends on the circumstances but I suspect this is a fairly standard arrangement. There is a way of avoiding the taxation at source if the commission is paid by a separate company and it is unrelated to the employment contract you are dealing with now. The problem is it only delays taxation as all commissions are assessible so if the employee avoids it in payroll they still have to deal with it under SA.

If the employer is paying the commission then they have an obligation to PAYE it whether they like it or not. The law says it is taxable income so the only issue is whether the employer can avoid the secondary NIC's and I don't think they can.

Payrollpro

I think they want to keep it simple so to avoide problems later on am going to include it in with their monthly payroll.

Thanks as ever