The division of tips/gratuities received by employees is often met with confusion around exactly WHO is liable for the relevant taxes and contributions.
To assist business owners HMRC has published a booklet entitled ‘Tips, Gratuities, Service Charges, and Troncs’. The booklet has been designed to cover the treatment of tips, gratuities, service charges, and troncs in relation to Income Tax, National Insurance, and VAT. It includes fifteen different examples which help to explain the correct treatment of tips and other monies given to bar and restaurant employees working in the catering and service industries.
The booklet also includes definitions of tips, gratuities, and service charges and an explanation of what a tronc is and how it works.
HMRC also confirms that payments to employees of tips, gratuities, service charges, or cover charges paid by customers do not count towards national minimum wage pay. This is the situation irrespective of any written or verbal agreement between the employee and the employer.
Save yourself the time and stress of trying to work out which of the 15 scenarios apply to you and your team by calling MJB Avanti, (08000) 388 799, our friendly in-house team of experts will advise you of the correct treatment for the gratuities received within YOUR business.