Staff tips

Staff tips

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I have been tasked with looking after the bookkeeping and accounts for a local community pub (actually bought by way of a SEIS). The investors/directors are largely successful business people who want things done by the book. The managers are experienced professionals who want to get on with running a pub. So my question is...what is the best way of dealing with staff tips? One way would be to keep a note of what every member of staff is given and put it onto their payslips. The other extreme (favoured, it has to be said, by the managers) is just to "divi" up the cash once a month and that's the end of it. Is there really any choice in the matter but to play it straight?

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By duncanedwards
17th Nov 2014 22:27

Do you mean ...
Pay the tax due or fraudulently avoid it? Or are you talking about how the tips are shared?

The latter is a policy decision, the former a potentially criminal matter.

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By cparker87
17th Nov 2014 22:45

It's simple

The only option in my eyes is to ensure you are on premise for each period of trading activity and, on or before the passing of the tip from the customer to the staff member, you must dive in, run the numbers through your payroll system and file the required RTI return having duly deducted the calculated tax and national insurance from the payment. 

In reality, I reckon you're best to collect the funds and for each pay period (weekly?) divide the tips collected by member of staff (perhaps by hours worked?) and include it on their payslip.

 

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By DMGbus
18th Nov 2014 08:45

PAYE coding out

I like to deal with tips in the following way:

The tips are nothing to do with the employer so employer doesn't handle themTips are paid directly by customers to employeesEmployees pay PAYE (but not NIC) by means of coding out adjustment

The above method averts an inappropriate NIC charge on both employee and employer.

It removes an admin burden from the employer.

A disadvantage is that a degree of estimation (hence inaccuracy) will be likely in the tax charge unless individual employees keep accurate records of tips.

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Replying to bernard michael:
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By Vaughan Blake1
18th Nov 2014 12:27

Troncmasters

DMGbus wrote:

 

Tips are paid directly by customers to employees

 

This is the key point of the issue.  If the customer hands the tip to the staff member directly then DMGbus is correct and the employee must return it via SA or agree a PAYE coding restriction.  However, this is rare as it cuts out the back of house staff from tips.  More usually the tips are pooled and then divided up.  The person doing the dividing is the 'troncmaster' (I love that word!).  It is they who have to sort out the tax and NIC.  If that person is the employer then it simply goes on the payroll.  If however, it is another senior employee then they must deal with it.

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Euan's picture
By Euan MacLennan
18th Nov 2014 11:22

I have never given a tip ...

I have never given a tip when buying a pint in a pub!

Presumably, this is a gastropub.  Tips may well take the form of service charges added to the bill for food and even if not, customers may choose to add a tip when paying the food bill with a card.  The whole area is a minefield.  Have a look at Booklet E24.

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