Work out commission after tax and National Insurance, and see why the month a commission lands takes more Income Tax than the months either side of it.
Commission is ordinary pay, taxed at your marginal rate through PAYE. Under a cumulative tax code, payroll measures your pay for the year so far against the share of your allowance and of each rate band the year has reached, so a commission month can be taxed partly at the higher rate even when the year as a whole is not. The months that follow give that back. National Insurance works period by period and is not unwound in the same way.
Commission is taxed as ordinary pay. Enter your base salary and expected commission.
Of £40,000.00 gross a year: Income Tax £5,486.00, National Insurance £2,194.40, Take-home £32,319.60.
Of the £10,000, you keep £7,200. The rest goes to Income Tax and National Insurance at your marginal rate.
Saving £135 a month — about 5% of this take-home — becomes £8,934.17 in five years at an example 4%: try the savings calculator.
2026/27 rates, England, Wales and Northern Ireland, no student loan. Open the full calculator to change region, student loan or pension method.
Payslip showing different figures? The payslip checker works out what your pay and tax code should have produced and shows which assumption could explain the gap.
| Tax/source year | 2026/27 |
|---|---|
| Region | England/Wales/Northern Ireland |
| Tax code basis | 1257L where the page uses PAYE defaults |
| Pension basis | No pension deduction unless this example says otherwise |
| Student loan basis | No student loan unless selected in this example |
| What is not decided here | PayBreakdown does not decide payroll correctness, lender approval, benefit entitlement or employer compliance, and does not give regulated financial, mortgage, debt, tax, payroll or legal advice. |
|---|
The figures on this page are worked from commission pay, using the values below. Open the calculator if your example salary differs.
Under a cumulative tax code, payroll does not tax the month on its own. It totals your taxable pay for the year to date, allows the share of your code allowance and of each rate band the year has reached, six twelfths of each by month six on monthly pay, works out the tax due on that running total, and deducts the difference between that and the tax already taken. Commission lifts the pay to date without lifting the allowance or the band available, so the running total can cross the point where the higher rate starts at that stage of the year even when the full year stays below it.
This example uses base pay of £3,000 a month with £9,000 of commission paid in month six, on a cumulative code with the standard allowance in England, Wales and Northern Ireland. The year totals £45,000, which is under £50,270, so the year owes no higher rate tax at all. The commission month still takes some.
The calculator above works on the year rather than on one payslip, so it shows where the payroll year ends up and not the month it passes through on the way. On the example figures nothing reaches £50,270, so the commission is taxed at the basic rate and at the main National Insurance rate throughout, and the take-home line is what is left once the timing has finished unwinding. Scottish rates and bands are different, so the point at which the higher rate starts moves, although the cumulative method is the same.
National Insurance is worked out on each pay period on its own, and payroll does not recalculate it across the year, so what a commission month does to it stays done. Which way it goes depends on where your regular pay sits. If regular monthly pay is already above the primary threshold, a lump pushes part of that month's pay above the upper earnings limit, where a lower rate applies, and the year costs slightly less than the same money spread evenly would. If regular monthly pay is below the primary threshold, spreading would have kept more of it under that threshold, so the lump costs more. Directors are the exception, because director National Insurance is worked out on an annual earnings period.
This estimate is worked out on £30,000 annual gross. Change any of those and the take-home figure moves; pension method and student loan plan usually move it most. A payslip can differ from any calculator because payroll works pay period by pay period, so a tax-code change, a bonus, arrears or a refund can land in one month and not the next. See how each deduction is worked out.
Check the taxable pay to date figure on the payslip rather than the month's gross. That running total is what the deduction was worked out from, and if it has passed the point the year has reached, the pay above that point was charged at the next rate up.
On a cumulative code that stays cumulative, yes, and through payroll rather than by claiming it. Each later payslip adds another month of allowance and of band while the pay to date rises by the base pay only, so the tax due to date falls back into line and the monthly deduction drops until it has caught up.
A week 1 or month 1 code taxes each pay period in isolation with no running total, so there is nothing for a later month to unwind and HMRC settles the position after the year ends. Starting a job part way through the year, or a recent code change, are the usual reasons for being on one.
Yes. Cumulative PAYE does not care what the payment is called, only what it does to your pay to date, so a bonus, backdated arrears and an unusually large overtime month all behave this way. The National Insurance timing effect applies to any of them as well.
Last updated 2026-08-27. Checked by Sean Elsmore. Rates last checked against GOV.UK on 2026-08-07. Estimates are for planning and should be checked against official records where the decision matters.