[MrMichael]

One of the problems with tipping so for unmentioned is the tax on earnings. Clearly with a service charge ( and I do not suggest the service charge goes to the staff) the staff pay tax, whereas a cash tip I imagine most staff do not declare it all to the taxman. I personally if giving a tip consider it a gift for good service, and am comfortable the taxman keeping his mitts off. How do others feel?

[PeterCoultas]

Mr Michael – two excellent reasons to pay direct in cash

[MartynSinclair]

@MrMichael – great idea, must ask my clients to tip me the amount of my invoice and in return, I will cancel my invoice….

[SimonS1]

This gave me a chuckle. Not the fact she got fired but what the customer wrote.

http://www.theguardian.com/commentisfree/2013/feb/01/fired-applebees-waitress-needs-tips

[MrMichael]

MartynSinclair…….see you in Belmarsh…….

[TominScotland]

MrMichael, the idea that cash tips are untaxed income in this country or, indeed, in the US (see SimonS1’s article link) is a common fallacy. HMRC know rightly enough what a reasonable tipping income is for a service job like hairdressing or waiting and will expect that to be declared. If it is not, they will challenge your figures..

[TiredOldHack]

Indeed – in fact, I understand that in Britain, the Inland Revenue has staff devoted entirely to calculating the annual value of a black cab driver’s tips, based on declared earnings from the meter.

[chewkc65]

I would prefer service charge to be added to the bill so that I can claim my expense reimbursement as per bill. It is difficult to claim reimbursement for cash tips. Even if I put in the tip into credit card charge, it is difficult and require a lot of explaination on why I am paying more than the stated bill amount. Anything more that 10% will horrified the folks who are not used to these exhorbitant “compulsory” tippings in USA. I should not bear these expenses when I am on business trips.

[MartynSinclair]

I used to use a mini cab firm where the drivers would discount cash fares over account business. A couple would openly boast that account business affects the amount of their housing and other state benefits!! The firm mysteriously closed for business…

Contrary to what my learned friend MrMichael states, 06/08/2015 16:23 BST above, all tips/gratutities (in the UK) are considered as Income and are due to be taxed either through PAYE or Self Assessment.

[SimonS1]

@Martyn – I think “due to be taxed” is the key phrase there. I think what MrM was suggesting is not that tips are non-taxable, but how much of the cash tips find their way on to the tax return to start with?

[SimonS1]

Looks like the restaurant chains like a snout in the trough as well.

http://www.bbc.co.uk/news/magazine-33849595

[MrMichael]

A recent court case at the court of appeal stated that gratuities are not subject to VAT. It came about through two court cases involving VAT and parking charges imposed by local authorities. One case the authorities lost, that was that VAT should not be payable in off street car parks. However the case they won, and that was VAT on overvends. To explain, if you go in to a pay and display car park that is 80p an hour but you only have a £ you put the pound in. the 20p is an overvend and you receive nothing for it. The court decided it was a gratuity ( yes to the council) and thus was not subject to VAT. When you consider overvends to local authority’s run to some £30m per annum the vat was a considerable sum. However, and I am no lawyer, surely then the service charge that is deemed to be the gratuity should also be VAT free.

[chewkc65]

I couldn’t agree more. Anything above 10% IS exorbitant.

[jsn55]

Ah, StewartK, if someone BRINGS you a drink, or makes sure you have a bowl of pretzels/nuts/snacks, comes by to see if you’re happy, then you tip.

[StewartK]

@huey: for sure, but in most cases it’s a bar where you wait to be served! Maybe the waitperson should tip us!

[Author]

Posts