PTP Tax Tip No 23 - 'Prudent' restaurant owner
Q. The minimum wage is crippling my restaurant. My waiting staff now needs to be paid over £5 an hour by me and they walk away with approximately £20 a night in tips tax free. It can't be right.
A. It isn't. The National Minimum Wage Act allows tips and gratuities to be included in an individual's minimum wage calculation. If the staff receive £20 for say 5 hours work in tips, the minimum they must be paid is £25.25 (5 x £5.05). This means you need only to 'top up' their earnings by £5.25 that evening.