Do you pay tax on tips?

sad_gills_fan

My step daughter works part time as a waitress. She has no other income so gets tax credits or income support, depending on how many hrs she works. (earns average of £60 per week).

On her pay slips she is being taxed on BR but yesterday was given new code 479L. The lady at the tax office told her she was being taxed on any tips she recived and the lady then went on to estimate this at £9 per week or £702 per year.

Does anyone know if this is legal? My step daughter rarely earns tips in the crumby excuse of a food place she works, and if she does get them, she has to share them with everyone else. Last week for instance, the total in tips for one average day was £4 .. divide that between the approx 8 people in on each day and you can see that she doesn't get much! :mad:

She has paid over £500 in tax on BR rate since joining this place ... can she hope to get some of that back at all?

I'm going to phone the tax office today but thought I'd ask the experts on here first!

Thank you for any help you can give.

robpw2

yes you do pay tax on tips . its the individuals responsibilty to inform tax office of the tips they earn

Mikeyorks

sad_gills_fan wrote: »

I'm going to phone the tax office today but thought I'd ask the experts on here first!

Yes it's taxable. And HMRC will make an estimated deduction from the code if your step daughter doesn't give them reasonable proof of the actual amount she is getting in tips.

She has paid over £500 in tax on BR rate since joining this place ... can she hope to get some of that back at all?

Highly likely once the new code is applied - but does depend on what else she has earned in the year. By the way £9 per week is circa £450pa (allowing a couple of weeks off) - not close to £702!

I'm going to phone the tax office today

Why? They won't talk to you - your step daughter needs to make the call. If she's uncertain on the 'phone .. they will normally discuss with you if she so requests and once she's done the security questions.

johnllew

Code 479L means she can earn £92 a week before paying tax so she should get all the tax suffered in her current employment from the 6th April 2007 to date via her wages. If the estimated amount of tips is wrong, tell them and they should amend the figure in her code. If she averages £60 a week though, it won't make any difference as she won't be liable to tax anyway.

fengirl_2

She needs to keep a scrupulous record of her tips in order to challenge this deduction.

sad_gills_fan

Thanks for your advice and help everyone.
I spoke to the tax office (step daughter had given consent already) and I now realise that she doesn't earn enough to pay tax anyway. She has paid over £500 this year by mistake so they're sending it all back to her. Glee. :beer:

Many thanks