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HMRC internal manual

National Insurance Manual

Tips, gratuities and service charges: Gratuity disregard conditions: Example - NICs due, neither of the gratuity disregard conditions are satisfied



Maria, the proprietor of a restaurant, intends that all the cash tips left on thetables will be paid to staff. To ensure the kitchen staff get a share, she collects allthe cash tips and shares them out to the waiting and kitchen staff at the end of each day.


Neither of the conditions in the gratuity disregard (NIM02905)are satisfied. In relation to the first condition, Maria has paid the tips to heremployees. In relation to the second condition, she decides on the allocation. NICs arepayable on these tips.