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HOSPA releases detailed guidance on tips and troncs in the hospitality industry < back

Written by suzie rose

We’re delighted to be able to release detailed guidance on tips, gratuities, service charges and troncs in a bid to provide a definitive understanding of their legal standing and taxability within our industry.

The in-depth practical guide looks to make long-established practices around tips and gratuities more transparent and fair, as well as highlighting practices which are no longer fit for purpose.

Jane Pendlebury, our Chief Executive, said: “Tipping is a time-honoured custom within the hospitality industry, but, as the understanding and approach to this has evolved and developed over the years – especially with the advances of technology – there’s an element of grey area and clouded understanding for both employers and employees alike when it comes to the legal definitions and where hoteliers and hospitality professionals stand in regard to tax and other considerations.”

Jane continued: “The guide sets out to provide a definitive understanding for those working within our sector, helping to clarify any misunderstanding or confusion and doing so in a way that’s as easily digestible as possible.”

Compiled by experienced hospitality professionals, the guide offers a definitive understanding for those working within the sector and covers a range of topics, which includes the following: 

  •  The different types of tips and gratuities
  • The definition of a service charge
  • The legal ownership of gratuities
  • An explanation of tronc schemes
  • Their treatment in regard to:

o   National Minimum/Living Wage

o   VAT

o   Income Tax

o   Income Tax

o   Class 1 National Insurance

  • Contractual agreements with staff

Comprising 24 pages of detailed advice, the content was co-authored by Andy Hamman of BDO, an international network of public accounting, tax, consulting and business advisory firms, and Peter Davies of WMT – a group of accountants, tax specialists and business advisers. They contributed their individual expertise, while Howard Field, a founder member and Honorary Fellow of HOSPA, was the guide’s editor.

Jane concluded: “I’d just like to take the opportunity to thank Andy, Peter and Howard for their excellent work on this. It’s wonderful that we’re able to use their respective expertise to help others in the industry and we’re extremely grateful for their dedication in pulling it all together.”

The guidance be accessed and downloaded via the following link:

If you’d prefer to receive a hard copy of the guide, then you can purchase one for just £5, including postage and packaging, via the following link:

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