5 Sales Commission Structures UK Teams Use (£70k Examples)

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Most articles on commission structure for sales teams list seven or nine variants, half of which nobody in the UK has ever run. In practice, UK sales orgs of 5–100 reps use five: flat rate, tiered, tiered with an accelerator, draw against commission, and base plus bonus with a clawback. Below, each one is worked through on the same rep — £50,000 base, £70,000 OTE, £500,000 annual quota — with the employer National Insurance cost attached and an honest account of where it falls over.

TL;DR

The five commission structures UK sales teams actually use are flat rate (one % on everything), tiered (rate rises by band), tiered plus accelerator (enhanced rate over quota), draw against commission (advance recovered from future earnings) and base plus bonus with clawback. On a £50,000 base / £70,000 OTE rep, the £20,000 variable element carries £3,000 of employer National Insurance at the 2026/27 secondary rate of 15% above the £5,000 secondary threshold, per HMRC's rates and thresholds for employers 2026 to 2027. The structure you choose matters far less than two decisions almost nobody documents: what you pay commission on, and when the number is treated as final. Get those two wrong and every structure on this list produces a dispute.

The five structures at a glance

The structure is the easy part. The fight is always about what counts as a closed deal and when the number stops moving.

1. Flat-rate commission: what does it look like on real numbers?

A flat-rate scheme pays a single percentage of everything the rep closes. On our benchmark rep — £50,000 base, £20,000 variable, £500,000 quota — that's 4% of closed revenue. Hit quota exactly and the rep earns £20,000, giving £70,000 total. Close £600,000 and they earn £24,000; close £300,000 and they earn £12,000. There are no bands, no thresholds and no arguments about which tier a deal landed in.

Flat rate breaks at the top of the team. A rep at 140% attainment earns 40% more variable pay than a rep at 100% — proportional, but not motivating, because the marginal effort to go from £500,000 to £700,000 is far more than the marginal effort to go from £300,000 to £500,000. Flat rate quietly tells your best rep that the last £200,000 was worth the same per pound as the first. It is still the right answer for a first scheme, for SMB desks with 14-day cycles, and for any team where you don't yet trust your quota-setting enough to build tiers on top of it.

2. Tiered commission: why do tiers create cliff edges?

A tiered structure raises the commission rate as the rep moves through revenue bands. A typical UK mid-market version on the same rep: 3% on the first £400,000 (£12,000), then 8% on revenue between £400,000 and £500,000 (£8,000) — £20,000 at quota, same OTE, very different behaviour. The steepening rate makes the last stretch to quota worth chasing.

The failure mode is drafting. If the plan says "achieve 80% of quota and 4% applies to all revenue", the rate is retroactive, and you have built a cliff: a rep who closes £399,000 earns £11,970, while a rep who closes £400,000 earns £16,000. One thousand pounds of extra revenue triggers £4,030 of extra commission — which is exactly the incentive to pull a deal forward with a discount, or to push one into next quarter. Marginal tiers, where each rate applies only to the revenue inside its band, remove the cliff entirely and cost you almost nothing to specify properly. If you inherited a scheme with retroactive tiers, that's usually the single highest-value fix available, and it's worth reading alongside how OTE is actually constructed in UK sales roles.

3. Tiered plus accelerator: what does over-attainment really cost?

An accelerator pays an enhanced rate above 100% of quota. Take the tiered plan above and add 10% on everything over £500,000. Our rep closes £700,000: £20,000 to quota, plus £20,000 on the £200,000 of over-attainment, for £40,000 of commission against a £20,000 target.

Here is the number most comp models miss. Total earnings become £90,000, and employer secondary Class 1 National Insurance at 15% on earnings above the £5,000 annual secondary threshold (HMRC, 2026/27) adds £12,750 — so a "£70,000 OTE" rep costs £102,750 before pension, and the accelerated £20,000 alone carries £3,000 of employer NIC. That is fine if the over-attainment is real margin. It is not fine if the deal shrinks later.

In practice, accelerators magnify clawback risk in a way that catches finance teams out: the rep was paid an enhanced rate on a number that subsequently falls, so the recovery is larger than the original overpayment ever was. The steeper the accelerator and the bigger the deal, the more it pays to hold the payout until the contract value is firm. Our full treatment of rate design and quota interaction sits in designing commission accelerators for UK teams.

4. Draw against commission: who is it actually for?

A draw is a guaranteed monthly advance against future commission. A recoverable draw of £1,500 a month gives a ramping rep £18,000 of certainty across their first year; as commission is earned, the draw is recovered from it. A non-recoverable draw is simply a guarantee you never take back — cleaner culturally, more expensive, and the right choice when the rep is carrying an unproven territory.

Two UK-specific constraints. First, commission counts towards National Minimum Wage compliance, and Acas guidance is explicit that if a worker's commission is not enough to reach the minimum wage in a pay reference period, the employer must top the pay up (Acas, entitlement to commission) — relevant for any low-base, high-variable desk against the £12.71 National Living Wage rate that applies from 1 April 2026. Second, recovering a draw is a deduction from wages: it needs clear prior written authority in the contract, because Acas guidance on deductions is that employers must check that a written agreement actually permits the deduction before making it (Acas, deductions from pay and wages). See draw against commission in the UK for the mechanics of recovery schedules.

5. Base plus bonus with clawback: the structure that costs you people

Here the variable element is a fixed bonus — say £5,000 a quarter at target — with a contractual right to recover it if the revenue doesn't stick. It is the standard answer in UK subscription businesses with genuine early churn, and it is the structure most likely to end in a formal dispute.

A worked failure mode, and one worth internalising: a top AE lands a large deal, the accelerator pays out a life-changing sum on the signing-day contract value, and weeks later the client exercises a 30-day opt-out on one expensive module. ARR drops, Finance recalculates correctly, and a brutal clawback lands on a rep who did nothing wrong. Nobody acted in bad faith — the maths was right. But the rep felt punished for a deal structure management had approved, momentum died, and they left within the quarter. The root cause wasn't the clawback clause. It was paying commission on gross signing-day value before the opt-out window had closed.

How does each structure interact with PAYE and NICs?

Commission is earnings. It goes through PAYE in the pay period it's paid, with income tax deducted cumulatively against the rep's tax code and Class 1 NICs deducted per pay period. That distinction produces a genuinely counter-intuitive result that affects how you time payouts.

Employee NICs are calculated period by period and are not cumulative like income tax (as the Low Incomes Tax Reform Group explains in its guide to National Insurance for employees). For 2026/27 the monthly primary threshold is £1,048, the monthly upper earnings limit is £4,189, and the employee rate is 8% between them and 2% above (HMRC). So take a rep on a £30,000 base with £20,000 of commission. Paid monthly at £1,666.67, their pay sits under the upper earnings limit all year and their employee NIC bill comes to roughly £2,994. Paid as a single £20,000 lump in one month, most of that month's earnings fall above the upper earnings limit at 2%, and their annual employee NIC drops to around £1,895 — about £1,100 less for identical gross pay.

The employer's side doesn't move: secondary Class 1 NIC is 15% on everything above the secondary threshold with no upper limit, so payout timing is NIC-neutral for the business. Don't design a scheme around this — quarterly-versus-monthly should be driven by deal cycle length and cash flow, not NIC arbitrage. But do know it exists, because it's the reason a rep's payslip percentage looks different on a big commission month, and "payroll made a mistake" arguments start there. For the full picture on rates, bands and payslip mechanics, see how commission is taxed in the UK.

How do you document a commission scheme so it survives a dispute?

Whichever structure you pick, the scheme has to exist in writing before the first payout, not after the first argument. Acas guidance states that an employer should include an employee's entitlement to commission in their written statement of employment particulars, and that where commission is contractual, changing the scheme means changing the contract (Acas, entitlement to commission). GOV.UK confirms the principal statement must be given on the first day of employment, with changes notified within one month (written statement of employment particulars).

Frequently Asked Questions

What is the most common commission structure for sales teams in the UK?

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