The simple act of tipping for good service can have various and possibly unexpected income tax and National Insurance contributions implications, says Richard Curtis.
The hospitality industry was one of the worst hit during the Covid-19 pandemic and received special support from the government. We thought things were recovering, but with inflation at rates that only older readers will remember, it remains to be seen whether going out to eat will remain on the agenda or will disappear along with other discretionary spending.
On the other side of the coin – now worth rather less than it was last year – eatery owners and their staff will be hoping their clientele remains loyal. For employees, this may be particularly true given that part of their income will be in the form of gratuities or tips.
Taxable income?
It has long been established that tips
