UK Salon Employees Guide to Tipping Laws, Tax and Compliance
Get prepared
Is your employer ready for the UK’s new tipping laws?
Here’s what you need to know
The Employment (Allocation of Tips) Act is expected to come into effect in October 2024.
The legislation applies to ’employer-received’ tips
– i.e. tips paid by card.
According to the legislation, your employer must:
- Fairly allocate 100% of tips to employees
- Ensure appropriate taxes are paid on tips. Some compliance options mean you will pay MORE TAX than others
- Pay out your tips within one month
- Have a written tipping policy available to you
- Maintain tipping records for three years
You can complain to the employment tribunal if your employer has not complied with the Act
Want to know more?
Download our full guide for free
Phorest is one step ahead to support you
Introducing… PhorestTips
Phorest makes things easier by sending your card tips straight to your account, so they are not ‘employer-received’. You’ll get your tips into your account instantly, without any additional taxes.
A Win-Win for Clients, Business Owners & Salon Employees
5 Reasons You’ll Love PhorestTips
Get your card tips, instantly
You’ll receive your card tips into your account without waiting for payrollTax savings = more tips retained
No National Insurance contributions will apply to your tips since they are collected directly by youMore tips!
On average, stylists and therapists see a 25% increase in tips when using an integrated PhorestPay Card Terminal to take card tipsYou can accurately record your tips to stay tax-compliant
You will be able to see records of your own tips throughout the year so you can report it to the HMRC at the end of the financial year and stay compliant with income tax laws.
A seamless personal touch from your clients
A simple, thoughtful way for your clients to show their appreciation, without the need for cash or QR codes
PhorestTips is an ideal tipping solution for salon teams of all kinds,
whether you’re an employee or a self-employed stylist or therapist.
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Calculate your monthly savings with PhorestTips
Some compliance options available to your employer mean more tax for you. See how much you’ll save with PhorestTips.
Use the slider to input your average monthly tips*.
£500
Paid by client via
Standard card
Standard card
PhorestPay card
Cash
Paid to employee via
Payroll
Tronc scheme
PhorestTips
Cash***
Employer taxes & fees
£13.80
£100**
none
none
Employee taxes
£32.00
£20.00
£20.00
£20.00
Retained tips
£68
£80
£80
£80
* This example assumes the employee is a basic rate tax payer – i.e. earning between £12,750 and £50,270 per year
**This is an estimate – Tronc scheme fees can vary based on salon size and intricacies of the agreement
***Does not cover tip jar / pooled tips, as these would be considered ’employer-controlled’ so fall under the tipping legislation
Want these savings?
Already with Phorest?
Get more info
Not yet with Phorest?
Book a demo