Tipping and taxes

What is tip

Tip is the amount of money voluntarily given to the service personnel of hotels, catering establishments, taxi drivers

If you receive a tip at work, it does not count towards the national minimum wage, but you must pay tax on it.

If you are filing an income tax return you must include a tip, if you don't complete a tax return, the tax office will assess your tip based on information received from you or your employer.

Who is responsible for paying income tax

If your employer pays you directly, they are responsible for paying income tax through the PAYE system.

If all the tips are combined and shared with each other, it is called "tronc". the person who oversees this process is called "troncmaster", and he is responsible for the payment of income tax.

In case your employer decides how to distribute the tip, national insurance must be paid as well as tax. Your employer is responsible for ensuring payment through PAYE.

The service fee is a tip?

If the pay is mandatory, it is not a tip, so if your employer gives it to you, it is processed in the same way as your pay.

If this is voluntary, you pay taxes and national insurance in the same way as you pay a tip.

Bonuses

They are part of your salary and you will pay taxes and national insurance on them through PAYE.