ÒÁÈËÖ±²¥

If you get tips at work they do not count towards the National Minimum Wage. You still have to pay Income Tax on tips and may have to pay National Insurance.

How tips are paid

You could get tips:

• directly from a customer in cash or electronically, for example through a mobile app
• as part of your pay packet from your employer
• through a separate system for managing and sharing out tips at your workplace (known as a ‘tronc’)

How your employer handles tips

There is a statutory code of practice on the distribution of tips.

By law, all tips must be given to workers without deductions.

The code of practice has information on:`

• the types of workers and tips covered by the legislation
• how employers can ensure tips are distributed fairly and transparently 
• the need for a written tipping policy and accurate record-keeping
• steps for resolving disputes, including escalation to an employment tribunal

Where to get help

Contact Acas if you have a question about tips or the National Minimum Wage.

You have to pay Income Tax on any tips you get, and may have to pay National Insurance.

Who reports the tax and whether you pay National Insurance depends on:

• how the customer paid the tip
• how tips are managed at your workplace

Tips paid directly to you

If you keep the tips you get directly from customers you must report them to HM Revenue and Customs (HMRC) yourself.

You must report tips in one of the following ways:

• in a Self Assessment tax return if you already fill one in
• through your personal tax account online
• by calling HMRC

HMRC will change your tax code if needed. Your employer will then deduct any tax you owe on tips when you get paid. You will not need to pay National Insurance.

Update your personal tax account or call HMRC again if the amount you get in tips changes substantially. This will help stop you paying too much or too little tax over the year.

Tips paid through work

You do not have to report tips:

• passed on by your employer, for example, discretionary tips customers added to their bill payments
• paid through a separate system for managing and sharing out tips at your workplace (known as a ‘tronc’)

Any Income Tax you owe on these tips will be deducted when you get paid.

Whether you have to pay National Insurance depends on how much your employer is involved in deciding how the tips are shared out.

If you have to pay National Insurance your employer will deduct it when you get paid.

Read more guidance on tips, tax and how troncs work.

Service charges

These are added to the bill before it’s given to the customer.

If the charge is compulsory, it’s not a tip so if your employer gives it to you, it’s treated in the same way as your wages.

If it’s voluntary, you pay tax and National Insurance in the same way as for tips.

Bonuses

These are part of your pay and you’ll pay tax and National Insurance on them. Your employer will deduct these from your wages before you get them.

Cash in hand wage payments

It’s illegal for your employer to pay you your wages ‘cash in hand’ without deducting tax and National Insurance contributions.

Report your employer if you think they are not paying tax or National Insurance contributions on your wages.