New tipping law now in force
Because of the ‘Tipping Act’, which came into force on 1 October 2024, more workers may now receive tips or receive them in different ways. Here we remind you that tips are taxable income and point you to the guidance on our website that explains what this means for you.
Under the Employment (Allocation of Tips) Act 2023, employers in England, Wales and Scotland must now pass on all tips and service charges to workers fairly and transparently.
The new law means that:
- some employers will pay service charges over to workers for the first time (as opposed to keeping them) and/or
- some employers will adopt different practices, such as removing service charges so that they do not have to handle tips.
As a result, workers may start to receive tips and/or receive them in a larger amount – and potentially in different ways. For example, some workers might receive tips directly (such as cash tips left on the table).
If you are a worker, it is important to understand that tips are taxable income. The way that tax is dealt with can be complex depending on how the tip reaches your pocket. There are also knock-on consequences for any welfare benefits you are on.
Read our guidance on how your tips are taxed (however they are paid) for more information.
You can find a government announcement explaining the new law on GOV.UK.
