Who gets the tip?

PeterJDavies

Sorry psdie, you're wrong. I work in the field of taxation day to day and, with respect, know what I'm talking about here.

Any tip which a customer pays on a card or a cheque, or any proceeds of a service charge, MUST have tax under PAYE deducted before the waiter receives it. If this isn't done then the owners of the business will be pursued for the tax by HMRC. Forget Business Link, go to HMRC's own website and search for booklet "E24" which confirms this.

The fact that not all waiters declare their cash tips doesn't make it right, they just choose to play the odds that they won't get caught. And selling a book on eBay is irrelevant. The money you get from doing so isn't earnings from your employment, so it's not subject to PAYE.

If you make a living selling books on eBay you must pay Income Tax on the profits, and you would be very foolish not to declare it, as HMRC obtains huge amounts of information from eBay about people who sell significant numbers of items there. If you just sell off some spare stuff at home like a second-hand book on eBay and don't make a profit then you don't have to pay tax - simple Capital Gains tax rules (oh, and you have an exemption of almost £10,000 per year too anyway).

Sorry to be pedantic; we all have our views on the rights and wrongs of tipping, but at least let's make sure we get the tax facts right as people do act on what they read here.

Peter

reluctantworkingmum

Tali wrote: »

dickywink - Tips are only taxable if paid to the employer as part of the bnill and then distributed to staff; if paid directly by the customer to the employee it does not involve the employer and so falls outside the tax system.

not too sure that is accurate. I seem to remember having my tax code changed to allow for cash tips that tax office assumed we would receive - purely on a guestimate - when i worked a season in a hotel

psdie

PeterJDavies wrote: »

Any tip which a customer pays on a card or a cheque, or any proceeds of a service charge, MUST have tax under PAYE deducted before the waiter receives it.

If you re-read my posts, I mentioned that service charges / tips paid by card must be taxed PAYE/NI by the business. However, according to the Business Link guidance (feel free to read), PAYE and NI does NOT have to be deducted by the *business owner* if the cash tip is paid directly to a member of staff and retained by that member of staff.

As I then went on to say, in that circumstance the member of staff should then declare the tip on their personal tax return. Having said that, the majority of low earnings waiters and waitresses in the land do not normally complete a tax return and I personally would sympathise if they thought it wasn't worth paying an accountant ~£120pa+ to complete one for them for the sake of a few hundred pounds of tips a year - after tax/NIC + accountant's fee, they'd have little left of the tips!

Hector may well not agree, of course. Also, I've never worked as a waiter, so have no idea what the actual potential earnings are each year. If their tips add up to thousands, then they should certainly complete a tax return. The loss of tax/NI to the public purse in that case would be up to around £560 (very roughly) on £2k of extra income, which is certainly of interest to HMR&C and should of course be declared.

reluctantworkingmum - Tali's statement is correct (according to the Business Link guidance) in that the employer doesn't need to account for tips paid directly to and kept by staff. That was an important point to highlight, given that a mistaken impression was emerging that the employer is always responsible for deducting PAYE/NICs from tips - according to Business Link, that's not the case if they are received directly and kept by staff.

Cheers, Ben

jsp_1983

psdie wrote: »

Hi LGL - IMO in the UK, tipping is *only* customary if the customer's order is taken and served at their table. If the customer has to order drinks/food at the bar / till (i.e., no waiter/waitress will look after them during their meal, including buffets, fast food, some pubs) then no tip is due.

If you are on genuinely low income, then I personally think it's perfectly reasonable to reduce the % that you tip accordingly. I personally think it's inpolite not to tip at all if you get great service (attentative and with a smile) and great food (relative to the level of menu prices) to your table, and can afford to do so.

How is it not impolite to tip someone working in McDonald's, then? After all, they run around, getting food, smiling and dealing with orders. In some ways, I'd imagine they're more versatile than waiting on staff.

On the subject of bar staff... I think it's incredibly cheeky when they give you your change back on a small plate, in expectation of a tip for pouring out a drink!

psdie

jsp_1983 wrote: »

How is it not impolite to tip someone working in McDonald's, then? After all, they run around, getting food, smiling and dealing with orders. In some ways, I'd imagine they're more versatile than waiting on staff.

On the subject of bar staff... I think it's incredibly cheeky when they give you your change back on a small plate, in expectation of a tip for pouring out a drink!

Agreed RE bar staff, except when they take order at table and bring drinks (in which case tip at end of eve). It's different on the continent tho .. in Paris for example, you're charged a service charge on drinks (already ludicrously expensive - e.g., £8 / beer) even if you sit at the bar! If you want service-free drinks, you must stand! :eek:

I'm sticking by guns on McDonalds and other till-service food places though - I appreciate that staff are paid the lowest of the low wages .. but the quality of food and service generally reflects this! You'd be lucky to get a smile with your Happy Meal!

Tipping in restaurants is primarily a reward for the waiting staff. No waiting staff / poor waiting staff, no tip. Which encourages good waiting and a better dining experience! :beer:

Redsocks_2

We recently took the kids to see a show in London (don't do it that often) and had a pre-theatre meal at the New China restaurant in Chinatown. The price for a main meal was about £8, the food was OK, not outstanding, the service was average.
When we received the bill, I was surprised (shocked): a handwritten number (£75.50 for a meal of 4, no alcohol) on a printed receipt, underneath the number a line "Gratuity", underneath that a line "Total".
Stapled to this receipt was a till printout with the name of the place, tel and VAT numbers in English, the 4 non-alcoholic drinks in English and the food items printed in Chinese. No prices.
I asked the waitress to add the prices which she reluctantly added by hand. Under the prices she had written "+12.5%" which she explained was the service charge (they apparently had already included this in the £75.50).
We had not seen any note about a service charge on the menu (maybe it's there), but the receipt gave me the impression that on top of the £75.50 I was supposed to add a "gratuity".
I then asked her to sum up only food and drinks. She said that I should do that, so I asked for a calculator. Came up with £66.50. Said I would give her a tip of £3.50 and pay £70 (I always tip in restaurants. If the service is outstanding, I tip up to 10% of the total, otherwise I give about £3-4). She said, why, was I not happy with the service and why am I refusing to pay the full service charge. At that point I said I was not going to argue and will pay exactly £66.50.
She then went off to ask the manager and eventually I was allowed to pay. On my way out the manager pressed me for more details about the service etc., but we left and won't return. The whole episode made me think whether or not my reaction was not adequate. What do others think?

psdie

Sounds perfectly reasonable to me Redsocks - glad you stuck to your guns. It's difficult when you have others with you and you start to question whether it's worth the argument.

Unless a compulsory service charge is up there in big red letters on the menu, I would certainly refuse to pay it, and instead leave a tip appropriate to the level of service received (as you did).

At 12.5% without pre-warning, this sounds like a blatant ruse to catch out the less attentative / caring - I shall likewise avoid the venue!

whitfreak

I have two issues with tipping.

1) Why should I? Surely you are getting paid to do that well job?

2)Who gets the tip? If you are tipping the waiting staff for going out of their way to help you, then its fair that they keep it all. But if its for the overall service then it should probably be shared out somehow.

When I worked at a Beefeater the tipping policy used to annoy me. Basically the waiting staff got to keep it all. Yet unless you had real seniority everyone was on the same (minimum) wage.

On a Friday night (best tipping night) an average table of guests would be taken to their table and had their drink order taken a hostess, some time after that the waitress would bring their drinks (poured by the bar staff who also had bar guests/food to worry about), and take their order and run the meals out for the first two courses, and someone else would take out the deserts. All of them had to work well for "good service" to be achieved, yet only the waiting staff got a tip/bonus. And god help any member of the bar staff who tried to put "their" customers first...

Jay2203

Hello, wonder if anyone could tell me how much the appropriate tip would be for the Concierge in a London hotel who got us show tickets.

Many thanks,

Jay

Kira000

A few years ago post uni, i worked at a branch of Pizza Hut in Cambridge. They had the system that each staff member collected their own tips from the tables they served. Back of house staff got paid £2ph more than FOH on the basis they didnt get any tips. The restaurant didnt get involved with counting or divying. I was told that i had to declare my tips to the IR as income, and they would tax me appropriately on that amount. If you failed to declare, then they would assume an annual total of £500 tips, and work from that. Worked out well as i generally received about £300 per week!
Darned hard work if you wanted to get good tips i can tell you though. Do the basic service, and you tended to get nothing- which is what was deserved. To get a good tip, you had to work your b*tt off, be everywhere for everyone, doing everything, on time and with a smile, and even then, accept that you may not get any tip at all. What really used to wind me up was the "keep the change brigade", who would give you £20 for a £19.99 bill, and tell you to keep the change. I found that quite insulting and I'd honestly prefer nothing at all!