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Restaurateurs and Caterers

Tips & Income Tax

If customers give cash tips directly to employees or leave them on the table and individual employees keep them without any involvement from the employer, then NICs are not due on those tips.

It is the responsibility of the individual employee to advise HMRC of the amounts of money received for income tax purpose. The tax will usually be recovered by an adjustment to the employee’s PAYE tax code.

Even though NICs are not due on certain tips, PAYE must be operated on ALL tips received by employees. Responsibility for operating PAYE rests with the employer even if the employer delegates the task of distributing tips to an employee or a third party where there is a Tronc scheme in operation.

Since 6 April 2004, operators must inform HMRC of any arrangements where an individual or third party other than the employer is responsible for sharing tips amongst its employees. This is so HMRC can identify the person responsible for PAYE in each period.

Morris & Co have a dedicated team specialising in Tronc schemes and are able to act as Troncmaster for your establishment.

For a free no obligation chat about your circumstances, please contact Michelle Anthony on 0151 348 8400 or email ma@moco.co.uk

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