Tax Responsibilities Relating to Staff Gratuities

This is the time of year that many employees have an enhanced expectation that their service will be rewarded in the form of increased tips. It may also be when any accumulated fund, underwritten by the members, is distributed to the employees by the club. Additionally, this is likely to be the point where disputes are likely to arise regarding the fair distribution of the tips and their liability for tax. HMRC state that whilst tips cannot count towards the National Minimum Wage they are subject to Income Tax with some, depending on how they are distributed, liable for National Insurance. The responsibility for ensuring the tax liability is met also varies, depending on how the tip was made....
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