Tipping law in the UK: what restaurants, pubs and cafés must do with tips

Under UK tipping law, employers in England, Scotland and Wales must pass on all tips, gratuities and service charges to workers in full, without deductions (apart from tax), and share them fairly. This comes from the Employment (Allocation of Tips) Act 2023, in force since 1 October 2024. Tips must be paid out by the end of the following month. If you get tips more than occasionally, you also need a written tipping policy and records kept for three years.

This guide covers what the law says, how tronc fits in, service and cover charges, tax and VAT, and a policy checklist.

This is general information, not legal or tax advice. For your own set-up, speak to Acas, an employment solicitor or your accountant.

The tips law in 10 points

1. All qualifying tips go to workers. No deductions except those required by law, such as income tax.
2. "Tips" includes service charges. The Act covers tips, gratuities and service charges, however you describe them.
3. Card tips are covered. Tips paid by card or app usually reach you first, so they're "employer-received" and fully in scope.
4. Cash tips can be covered. Cash kept by the worker who received it is outside the law, unless you control or influence how it's shared (for example, a cash tips jar you divide).
5. Share fairly between workers at each place of business, having regard to the statutory code of practice.
6. Pay on time: no later than the end of the month after the customer paid.
7. Written policy if tips are paid more than "occasionally and exceptionally", available to all workers.
8. Records for three years of how every tip was dealt with.
9. Workers can ask for records. One written request per three months; you must reply within four weeks.
10. Agency workers count. They must get a fair share where they work at your site.

The card fee point catches many owners. The code says tips must be passed on without deductions, except in very limited cases such as income tax. It makes no exception for card processing fees, so don't take them out of tips without legal advice.

Who and what the law covers

Fair allocation: what the code of practice says

The law doesn't set one formula. The statutory code of practice says employers must have regard to it, and employment tribunals take it into account. Factors the code lists for deciding a fair split include:

• the type of work, role and responsibilities
• basic pay
• hours worked or shifts
• individual or team performance
• seniority and length of service

Different splits can be fair. What isn't fair: leaving out some staff with no reason, sharing based on things unrelated to the work, or managers taking a big share for no good reason.

Can managers and owners share in tips? Workers, including managers, can get a fair share for work they do at the site. The code lists seniority and level of responsibility as factors you can use. It doesn't cover self-employed people and doesn't deal directly with owners or directors, so if you own the business and also work shifts, take advice before taking a share.

Revised code: what's changing

The Employment Rights Act 2025 adds a duty to consult workers when you write or change your tipping policy. A revised code was published in June 2026, then withdrawn on 29 July 2026 for a new public consultation, which ran from 19 August to 29 September 2026. GOV.UK says employers should keep following the existing code for now. The government planned the consultation duty for October 2026, so check whether it's in force before you next change your policy. Consulting your team is good practice anyway.

What is a tronc?

A tronc is a pooled tips scheme run by a troncmaster, who decides how to share tips and service charges. The Act lets employers use an independent tronc operator, and if that arrangement is fair, you're treated as having shared the tips fairly. You remain responsible for making sure the scheme is fair and transparent.

Work out each person's share with our free tronc calculator.

Tax and National Insurance on tips

HMRC's guidance E24 covers troncs in detail. Where a troncmaster shares the tips, you must tell HMRC, and a PAYE scheme is normally set up in the troncmaster's name. NI is only avoided if you don't decide, directly or indirectly, who gets what. HMRC says the 2024 tips law doesn't change how tips are taxed.

Tips don't count towards the minimum wage. GOV.UK is clear that tips don't count towards the National Minimum Wage, so you must pay at least the minimum wage on top. From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over.

Service charge law in the UK

Is service charge mandatory in the UK? Only if you make it part of the price. There are two kinds:

Show it clearly. Consumer law bans misleading prices, so show any service charge or cover charge clearly on the menu, before the customer orders, not just on the bill. HMRC also treats the menu as setting the deal.

What about cover charges?

A cover charge is a fixed charge per person for things like bread, setting or entertainment. It's part of the price of the meal, not a tip, so:

• it's part of what the customer pays for the meal, so it takes the same VAT as the meal (20% for restaurant meals),
• the tips law covers tips, gratuities and service charges, and the code doesn't mention cover charges, so a genuine cover charge doesn't have to go to staff,
• it should be shown clearly on the menu before customers order.

Calling something a "cover charge" to avoid passing on a service charge is risky. If customers think it's for service, it may be treated as one. Corkage works the same way; see our corkage fee guide.

Northern Ireland

The Employment (Allocation of Tips) Act 2023 extends to England and Wales and Scotland only. Employment law is devolved in Northern Ireland, and we couldn't find an NI equivalent in force. The government's 2026 consultation on the revised code also says it doesn't apply in Northern Ireland. NI employers still face general rules, such as no unlawful deductions from wages, and must be honest with customers about where tips go. Many NI employers follow the GB code anyway.

How to write a tipping policy: checklist

Your written policy must say whether you require or encourage tips and how you deal with them, including how you split them. Make it available to all workers (staff room, staff app or email), and give them the new version when you change it.

• Which payments are covered: card tips, cash tips, service charge, online tips
• Whether service charge is optional or compulsory, and the rate
• Who shares in tips (roles, agency workers, trainees, managers)
• The split method: hours, points, roles or a mix, with an example
• Who decides: you or an independent troncmaster
• When tips are paid (at the latest, the end of the following month)
• How tax and NI are handled
• How cash tips are handled
• How staff can see records and raise a concern
• Date, version and how you consulted staff

What happens if you don't follow the law

Workers can bring a claim to an employment tribunal:

• Tips not allocated fairly or not paid on time: claim within 12 months of the failure. The tribunal can order you to revise the split, pay workers (including those who didn't claim) and pay compensation of up to £5,366 per claimant for financial loss (the cap from 6 April 2026; it rises each April).
• No written policy or records: a shorter time limit applies, so check the current limit with Acas. Compensation is also capped at £5,366.

Acas offers free advice and early conciliation for both sides.

Tips and your ordering system

If customers tip through card machines, QR table ordering or online orders, those are employer-received tips. You must track them, include them in your records and pass them on in full.

Menuthere gives you a commission-free ordering page for table, collection and delivery orders, with sales reports you can use alongside your tips records. Menuthere doesn't add tips or a service charge at checkout, so tips still come through your card machine or in cash. Record and share them under your tips policy as usual.

Take table, collection and delivery orders with 0% commission. Pubs: see our.

Create your free ordering pagetable ordering systemEPOS for pubs