1. What is UK Commission Tax?

Commission earnings in the UK are subject to income tax based on your tax band. The amount of tax you pay depends on your total annual income, with different rates applying to different portions of your earnings.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Commission \) — Your commission earnings in GBP
• \( Tax\,Rate \) — Your applicable tax rate based on income band

Explanation: The calculator first determines your tax band based on your annual income, then applies the appropriate rate to your commission.

3. UK Tax Bands Explained

2023-2024 Tax Bands:

• Personal Allowance: 0% on income up to £12,570
• Basic Rate: 20% on income £12,571 to £37,700
• Higher Rate: 40% on income £37,701 to £125,140
• Additional Rate: 45% on income above £125,140

4. Using the Calculator

Tips: Enter your commission amount in GBP and your total annual income (including this commission) to determine the correct tax rate. The calculator will show both the applicable rate and the tax due.

5. Frequently Asked Questions (FAQ)

Q1: Is commission taxed differently from salary?
A: No, commission is taxed as part of your total income at your marginal rate, just like salary.

Q2: What if my commission pushes me into a higher tax band?
A: Only the portion of income in each band is taxed at that rate. The calculator accounts for this.

Q3: Are there any deductions before tax?
A: Your personal allowance (£12,570) is tax-free. National Insurance may also apply separately.

Q4: What about Scottish tax rates?
A: Scotland has slightly different bands and rates. This calculator uses UK-wide rates.

Q5: When is commission tax due?
A: Typically through PAYE if you're employed, or via self-assessment if you're self-employed.