NI on commission payments after employee's left

JodieRJodieR Experienced MentorRegistered Posts: 1,002
Does anyone know how to calculate NI payments on commission paid to employees after they've left the employment? The man in question is leaving my client's company at the and of April and going to his new job, so his P45 will be issued soon. There will be approx £2k commission due to him in May/June, depending when the customers pay my client so it may be all in one month or split over 2. I'm happy that it needs to be taxed using the 0T tax code, and that I need to tick a box to say that it's a payment after the employment has ceased, but the employee wants to know now what the net amount will be and I don't know whether NI will be deducted, and if so what the amount will be.
Can anyone help?
thanks
jodie

Comments

  • Rozzi RainbowRozzi Rainbow Trusted Regular Registered Posts: 465
    Hi Jodie

    Try this HMRC link, see if it helps:
    http://www.hmrc.gov.uk/payerti/employee/employee-leaves.htm#4

    Near the bottom of the page it details the tax and NIC implications on payments to an employee who has left. The NIC seems to be calculated on a standard (presumably monthly) basis, or a weekly basis depending on what the payment is for. It sounds to me like it would be classed as final payment of wages or salary and the usual earnings period would apply.
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    Thanks for your reply - I had found that link, but the bit about NI only says 'Calculate NICs if appropriate - there's information to help you work out if the most common types of one-off leaving payments are liable to NICs or not in CWG2 'Employer Further Guide to PAYE and NICs' and when i tried to read CWG2 last week I was looking at sections 60 & 61 and couldn't find any answers there. I've just had another look and see that in Section 6 it explains that the period you use depends on whether the payment is a regular or irregular payment and now I'm not sure whether commission counts as a regular or irregular payment and therefore I'm still stuck!
  • Rozzi RainbowRozzi Rainbow Trusted Regular Registered Posts: 465
    I think you need to consider this employee's payment arrangements rather than just wondering about commissions in general. Is he always paid commissions each/most months as part of his salary? If so, I would class that as a regular payment. If this commission due is a one-off then I would class it as irregular.
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