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My client company employs a salesman, who they are keen to retain. The directors have agreed to lend him £20,000, which will be repaid — the plan is at a rate of £1,000 per month — from his commission; he receives a monthly basic salary, plus a commission based on sales. I need to persuade the directors that there is a benefit in kind charge here and should be grateful if readers could confirm that this is the case. Although, would it be different if the loan was used as a deposit on a house?
My client company employs a salesman who they are keen to retain. The directors have agreed to lend him £20 000 which will be repaid — the plan is at a rate of £1 000 per month — from his commission; he receives a monthly basic salary plus a commission based on sales. I need to persuade the directors that there is a benefit in kind charge here and should be grateful if readers could confirm that this is the case. Although would it be different if the loan was used as a deposit on a house?
I am also a little confused as to the mechanics of the repayment and how PAYE applies. Is repayment made from net commission or can the gross amount simply be foregone? And would there be a Class 1A National Insurance liability on the loan?
Readers' advice is welcomed.
Query...
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