Commission is still the main income on tour operator packages, cruises, travel insurance and many hotel bookings. Suppliers sometimes add override or incentive commission for meeting sales targets. Many scheduled airline fares now pay little or no commission to UK agents, so agents charge service fees instead.

Commission and VAT

An agent acting as a disclosed intermediary, naming the principal and taking no significant commercial risk, accounts for any VAT on its commission or fee rather than on the holiday price. HMRC points out that receiving commission does not by itself make you an agent: it looks at your contracts and how the sale is presented to the customer. A business that also makes margin scheme supplies may have to include commission that is not readily identifiable in its TOMS calculation.

In a homeworking network

The homeworking company usually receives the supplier’s commission and passes an agreed share to the homeworker. Splits vary widely between companies.

Watch out for

• Commission is different from a mark-up, which the seller sets, and from a service fee, which the customer pays.

• Rates and conditions are commercial and vary by supplier and agreement, so there is no standard rate.