Changes to the guidelines on tips and tipping

Tronc’s to be counted as paid by the employer

The Central London Employment Tribunal’s decision that discretionary service charges and credit card tips paid via the tronc are to be counted as paid by the employer, and thus a component of an employee’s wages for the purposes of National Minimum Wage (NMW) legislation is to be appealed by HM Revenue and Customs (HMRC), according to a recent report. A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade.

If successful, HMRC’s challenge will make it necessary for employers to pay the NMW excluding the value of gratuities. The benefit to HMRC would be a greater Income Tax and National Insurance take due to the higher levels of basic wages which would have to be paid to some employees.

Levels and bases of, and reliefs from, taxation are subject to change.

esmarttax
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