Tips and Tax

The Court of Appeal judges are considering their decision on a challenge from the Mayfair private members’ club, Annabel's, to an Employment Appeal Tribunal (EAT) decision last year that tips cannot be used to make up the National Minimum Wage. Apparently the club's tips system is known as a ‘tronc’ scheme under which tips are centrally organised. Under such a scheme employees and employers didn't have to pay National Insurance contributions and customers did not have to pay the VAT on the tip.

Tipping is an important topic for the hospitality sector - more to follow once the Court of Appeal has made its decision.