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Tips and troncs
A revised booklet E24 Tips Gratuities Service Charges and Troncs has been published on the Inland Revenue website www.inlandrevenue.gov.uk. It follows discussions between the Revenue and industry representatives and has led the Revenue to clarify some aspects of the guidance which it first published in February 2004.
The guidance for tips in relation to tax and VAT is unchanged. The guidance relating to national minimum wage and liability for National Insurance has been expanded and clarified further.
Any payment that counts for national minimum wage purposes cannot be accepted as a tip which by its very nature is a voluntary and unexpected payment. A payment that discharges a contractual entitlement cannot be accepted as a tip. Therefore such payments cannot benefit from the National Insurance exemption for tips. If there is a contractual entitlement to a share of the tips...
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