UK Tipping: What the Law Says About Your Tip

The question government does not answer

There is no official guidance on how much to tip in the UK, in a restaurant or anywhere else. Tipping is voluntary, custom varies by place and by trade, and any percentage you see quoted is somebody else's estimate rather than a published figure. This page used to carry several of them. It does not now.

What the government does publish is the law on what happens to a tip once it is left. That is the part with real consequences, and it is the part worth knowing whether you are paying the bill or working behind it.

The Employment (Allocation of Tips) Act 2023

The Act received Royal Assent on 2 May 2023, and the statutory code of practice made under it came into force on 1 October 2024. It amends the Employment Rights Act 1996, and the code summarises what employers must now do:

• Pass on all tips and service charges to workers without deductions, except in very limited cases such as the deduction of Income Tax
• Allocate them fairly and transparently where the employer takes control, or exerts significant influence, over how they are distributed
• Have regard to the statutory code of practice when doing so
• Keep a written tipping policy and make it available to all workers
• Keep a record of all tips paid at the place of business and how they were allocated, which workers can ask to see

The code covers "tips, gratuities and service charges" together, and says explicitly that this includes both automatically added and other voluntary service charges. The method of payment — cash, card, or an app — does not decide whether the Act applies.

Read it at GOV.UK, distributing tips fairly: statutory code of practice.

When the tip has to be paid over

The code puts a deadline on it: employers must ensure all tips are distributed to staff, at the latest, by the end of the month following the month in which the customer paid them. Its own example is a tip left on 23 June, which must be distributed by 31 July at the latest.

Fair does not have to mean equal. The code says allocating tips fairly "does not necessarily require employers to allocate the same proportion of tips to all workers", and lists factors an employer may use — type of role, including the split between front of house and kitchen; basic pay; hours worked when tips were received; performance; seniority; length of service; and what the customer intended. It applies to agency workers as well as directly employed staff, and not to the self-employed.

What falls outside the Act

Two things, and the code names both. A cash tip a worker receives and keeps, with no employer control or involvement, is out of scope, because the money never passes through the business. So is digital tipping where a customer uses an app to tip a member of staff directly, bypassing the employer.

The line is control, not payment method. The code says an employer is likely to have exercised control over cash tips if it tells staff how to share them out, or collects them and distributes them at the end of a shift or through the payroll — and that a tip paid by card or app is likely to be received by the employer, which makes it theirs to distribute fairly.

Service charges, and the tax line

For allocation, the Act treats service charges like tips. For tax, GOV.UK draws a distinction on its tips at work page: a service charge is added to the bill before it is given to the customer, and if it is compulsory it is not a tip — where the employer passes it on, it is treated in the same way as wages. A voluntary service charge is taxed in the same way as a tip.

If you are the one being tipped

This is where the rules matter most, and hospitality work is common on a Student visa or among people sponsored on a Skilled Worker visa. GOV.UK publishes four things worth holding on to:

• Tips do not count towards the National Minimum Wage. Your employer cannot use them to make your pay up to the legal minimum.
• Income Tax is due on tips. If you keep tips you receive directly from customers, you report them yourself — in a Self Assessment return, through your personal tax account, or by calling HM Revenue and Customs. Tips passed on by your employer, or shared through a "tronc" arrangement, have the tax deducted when you are paid, and you do not report them.
• You can ask to see the record. A worker may make a written request, limited to one in any three-month period, to see the employer's tipping record going back up to three years for a period they worked throughout. You are shown the total received at the place of business and the amount allocated to you, not what other people got.
• There is a route if something is wrong. Workers can enforce these rights at an employment tribunal, and judges have a duty to take the code into account. Acas advises on tips and the National Minimum Wage, and can help mediate first.

One more from GOV.UK: it is illegal for an employer to pay wages "cash in hand" without deducting tax and National Insurance, and you risk losing employment rights if you accept it.

So what do you actually do at the table?

Whatever you decide. Tipping is voluntary, nobody publishes a figure, and no rule requires you to add anything. Check the bill for a service charge before you decide, so you know what has already been added — and if you do tip, the law is now on the side of it reaching the people who served you.

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• UK Culture Guide
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