Your tips are paid via a tronc scheme which is treated as a secondary payroll by HMRC. It won't have the same tax code as your primary payroll, as a tax code effectively states how much tax-free allowance you have. We send all the information HMRC needs about your secondary payroll and your employer sends information about your primary payroll - then HMRC tells us both what to do based on that.
Here’s a full breakdown of how the tax aspect of your payments works:
- We process tip splits on a weekly basis. From the amount allocated to you, we withhold a certain percentage for tax purposes based on your tax code.
- On a monthly basis, we report your earnings to HMRC, and they determine how much tax you owe.
- If we’ve withheld more than necessary, the difference is refunded to your TiPJAR account as a tax adjustment.
- The tax adjustment is paid on the third Thursday of every month.
If you're concerned, you can contact HMRC and tell them you are receiving tips through a tronc scheme and that as a result you are part of a secondary payroll and they can make any required adjustments for you.
Here is the link to the HMRC website where you can find some ways to get in touch with them:
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