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Where Taxpayers and Advisers Meet

Monthly tax deduction from salary

Cogsy_1976
Posts: 2
Joined: Sun Aug 11, 2019 5:18 pm

Monthly tax deduction from salary

Postby Cogsy_1976 » Sun Aug 11, 2019 5:27 pm

Ok question here, I get a base salary I think of around £28k but also get paid commission which I usually take £1k per month which puts me below the high rate tax threshold.

However last couple of months I have taken say £2k which if you look at over a year puts me into the high rate tax threshold. I’m trying to draw my commission as tax efficiently as possible, am I right in thinking if I took say £2k commission one month then I am taxed on a high rate basis and then if say I took £1k the following month then I would be taxed on the basic rate but would get taxed less because I had paid more the month before?

Hopefully that makes sense, what I don’t understand is why they don’t just tax you on a month by month basis so you get taxed nothing until you are over the personal allowance and then taxed at basic until you go over the basic rate rate limit.

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Monthly tax deduction from salary

Postby SteLacca » Tue Aug 13, 2019 12:29 pm

Who determines your commission? Are you, by any chance, talking about an owner managed business, with you as the owner? If not, how are you able to determine the level of commission in the first place?

Regardless, for PAYE you are taxed when your income is made available to you. If this is on the basis of £2,000 per month, but you choose to only take £1,000 and defer payment of the balance, you will still be taxed on £2,000.

Cogsy_1976
Posts: 2
Joined: Sun Aug 11, 2019 5:18 pm

Re: Monthly tax deduction from salary

Postby Cogsy_1976 » Tue Aug 13, 2019 12:36 pm

Thank you, no basically I get commission for every bit of business I do, I sometimes have a fair bit in reserve so previously was taking £1k per month but there was more available to me so I had been taking more, I was just thinking of the most tax efficient way of drawing it really that was all.

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Monthly tax deduction from salary

Postby SteLacca » Wed Aug 14, 2019 2:53 pm

It really sounds like PAYE may be being processed incorrectly. Who does the payroll - you may need to speak to them. For earnings (including commission) you are taxed when it's available for you, even if you "bank" it by not drawing it.


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