Do you pay tax on tips?

For hospitality and service workers who get tips and want to know how they are taxed.

Applies to: England, Scotland, Wales, Northern Ireland Last checked against official sources: 6 October 2026

Yes. You pay Income Tax on tips, and sometimes National Insurance, depending on how you get them.

Tips a customer gives you directly: you must tell HMRC, and they change your tax code.
You do not pay National Insurance on tips customers give you directly.
Tips paid through your employer or a tronc: tax is taken from your pay, so you do not need to tell HMRC.
A compulsory service charge is taxed as normal wages.
Tips do not count towards the National Minimum Wage.

Key facts

Tips are taxable income
Cash tips: tell HMRC
No NI on direct cash tips
Not part of minimum wage

What tax on tips means

Tips are money customers give you on top of the bill, in cash or on a card. Tips count as income, so you pay Income Tax on them. Whether you also pay National Insurance depends on how the tips reach you.

Tips do not count towards the National Minimum Wage. Your employer must pay you at least the minimum wage before any tips.

How each kind of tip is taxed

How you get the tip	Income Tax	National Insurance	Do you tell HMRC?
Given straight to you by a customer and kept by you	Yes	No	Yes
Paid to you by your employer in your wages	Yes, taken from your pay	Depends on how much your employer controls who gets what	No
Shared through a tronc (a tips pool run by a "troncmaster")	Yes, taken from your pay	Depends on how much your employer controls who gets what	No
Voluntary service charge	Same as tips	Same as tips	Same as tips
Compulsory service charge	Taxed as wages	Taxed as wages	No

How to tell HMRC about tips you keep yourself

If customers give you tips directly, you must tell HM Revenue and Customs (HMRC). You can do this:

Through your personal tax account online.
By calling HMRC.
On a Self Assessment tax return, if you fill one in.

HMRC will then change your tax code if needed. Your employer takes the tax due on your tips from your wages each payday. You do not pay National Insurance on these tips.

If the amount you get in tips changes a lot, tell HMRC again. This stops you paying too much or too little tax during the year.

Worked example (2026/27)

Sam works in a café and gets about £50 a week in cash tips from customers. Over a year that is £50 x 52 = £2,600.

Sam's wages already use up the £12,570 Personal Allowance, and Sam is a basic rate taxpayer in England. So the tips are taxed at 20%: £2,600 x 20% = £520 a year, or £10 a week. HMRC adjusts Sam's tax code and the tax comes out of Sam's wages.

In Scotland, the rate on the tips would follow Scottish Income Tax bands, from 19% to 48% in 2026/27.

Your right to your tips

In England, Scotland and Wales, the law says employers must pass on all tips to workers without deductions. A statutory code of practice, in force since 1 October 2024, says tips must be shared fairly and openly. Employers must have a written tipping policy. If there is a dispute you can go to an employment tribunal.

A revised code was published in June 2026, then withdrawn in July 2026 so the public could be consulted. Until that finishes, employers follow the original code.

Getting help

For questions about tips or the National Minimum Wage, you can contact Acas.

Related guides

Where this comes from

Tips at work (GOV.UK)
Tips and tax (GOV.UK)
Distributing tips fairly: statutory code of practice (GOV.UK)
Distributing tips fairly: revised statutory code of practice (GOV.UK)
Income Tax rates and allowances (HMRC)
Scottish Income Tax (GOV.UK)

Get it done

This takes you to the official service, which is free to use.

Check how tips are taxed

Common questions

How do I tell HMRC about cash tips?

Use your personal tax account, call HMRC, or include them on your Self Assessment return. HMRC then changes your tax code if needed.

Do I pay tax on tips through a tronc?

Yes, but Income Tax is taken from your pay, so you do not need to report them yourself.

Can my employer keep some of the tips?

No, in England, Scotland and Wales. The law says all tips must be given to workers without deductions.

Official sources

1.Tips at work: tips and tax (GOV.UK)www.gov.uk/tips-at-work/tips-and-tax
2.Tips at work (GOV.UK)www.gov.uk/tips-at-work

Checked against GOV.UK on 6 October 2026

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