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Guidance

When National Insurance and PAYE is due on tips, gratuities and service charges (E24)

Use this guidance if you're an employer or are responsible for arrangements to share tips, gratuities and service charges in catering and service industries.

Updates to this page

From:
HM Revenue & Customs
Published:
28 March 2014
Last updated:
18 July 2025
Show all updates

  1. 'Example 12 — when tips are retained' has been removed.

  2. Information about the 'Online Customer Forum' has been removed because it has now closed.

  3. Guidance about agencies and troncs has been added to section 8, 'National Insurance contributions and troncs'.

  4. Information has been added to confirm that new legislation introduced on 1 October 2024 about the distribution of tips and gratuities to employees does not affect how they should be assessed for tax and National Insurance contributions.

  5. Section 6 has been updated to advise the employer that they must contact us to set up a tronc scheme.

  6. A section has been added to the guide covering tips paid electronically.

  7. First published.

Documents

Guidance on tips, gratuities, service charges and troncs

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Details

This guidance explains how employers and anyone responsible for sharing tips (including troncmasters), should treat tips, gratuities and service charges for:

  • Income Tax
  • National Insurance contributions
  • National Minimum Wage
  • VAT

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