Commission Tax Calculator UK

If part of your income is commission, you've probably had the experience: a great month on the sales floor, a big number on the payslip, and then a deductions line that makes you wonder whether commission is taxed at some special punitive rate. It isn't. Commission is taxed exactly like salary, but the way PAYE handles lumpy, variable income creates effects that look like over-taxation, and occasionally are, temporarily.

This calculator shows what you'll actually take home from commission earnings using 2026/27 rates.

The rules: same bands, same NI

Commission is employment income. It's added to your basic pay in the period it's paid and taxed as one combined figure through the same 2026/27 bands:

Employee National Insurance applies at 8% between £1,048 and £4,189 a month, and 2% above. There is no commission-specific rate anywhere in the system.

Why big commission months feel over-taxed

PAYE spreads your Personal Allowance and tax bands evenly across the year, one-twelfth per month. In a month where commission spikes your pay well above your usual level, more of that month's income lands in the 40% band for that month, even if your annual total will stay below £50,270. Two things then happen:

• If your annual income genuinely stays in the basic rate band, the cumulative nature of PAYE claws the difference back automatically, quieter months later in the year are taxed more lightly until it balances
• If your annual income genuinely crosses into higher rate, the extra tax was correct all along

Either way, by the end of the tax year you'll have paid tax on your total income at the proper rates, the monthly journey is just bumpier than a salaried worker's.

Worked example

Dan has a £24,000 basic salary (£2,000 a month) and earns £18,000 of commission across the year, but unevenly, £6,000 of it lands in March:

• His annual total is £42,000, entirely within the basic rate band
• His true annual Income Tax is (£42,000 - £12,570) x 20% = £5,886
• Employee NI is about £2,354.40, giving estimated take-home pay of £33,759.60
• In the £8,000 March payslip, PAYE may briefly tax part of the commission at 40%, treating that month as if it were his new normal
• Because March is the last month of the tax year, any excess is reconciled, if it had happened in, say, June, later payslips would have self-corrected

Commission-only pay and the minimum wage floor

If you're an employee or worker paid wholly or mainly by commission, your employer must still ensure your pay meets the National Minimum Wage for every hour worked in each pay reference period. A dry month on the sales floor can't lawfully result in sub-minimum pay, the employer must top it up. This is a genuine legal obligation HMRC enforces, not a courtesy.

Commission and your other entitlements

Because commission is part of your normal remuneration, it flows into other calculations:

• Holiday pay — regular commission must generally be reflected in holiday pay, otherwise taking leave would mean a pay cut, which case law doesn't allow
• Statutory payments — maternity, paternity and sick pay are based on average earnings that include commission
• Pension contributions — whether commission is pensionable depends on your scheme's definition of pensionable pay; many auto-enrolment schemes use qualifying earnings, which include commission

Unpaid commission when you leave

A frequent flashpoint: you resign, and commission on deals you closed hasn't been paid yet. Whether you're owed it depends heavily on your commission plan's wording, particularly clauses requiring you to still be employed at the payment date. These clauses are often enforceable, so read your scheme rules before handing in notice with a big pipeline outstanding, the timing of your resignation can be worth thousands.

This is general guidance, not financial or legal advice. For disputes over unpaid commission, check your commission plan and contact Acas.