Tax FAQ
Payroll
I run a restaurant where customers pay tips to members of
staff. What is the tax position with regard to these?
The tax treatment depends on how the tips are given and
distributed to the members of staff.
- If the tips are given direct to the members of staff by
customers, there is no deduction of tax. The individuals should
self assess for tax purposes.
- If the company operates a "tronc", then the tronc master
deducts basic rate tax from the combined tips before
distribution.
- If the employer has any control over how the tips are
distributed, tax and National Insurance must be deducted through
the payroll.
Please read legal information.