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NIC - National Insurance Contribution Help for Service Businesses
 If
your business works within a service
industry such as hairdressing, restaurants,
hotels, bars or pubs then news of changes to
the taxation of tips could provide a boost
to your finances as well as slightly
simplifying your tax returns.
HM Customs & Revenue (formerly the Inland
Revenue) has published new guidelines
stating that tips received by staff will no
longer be liable for National Insurance
Contributions (NIC); except for when the
employer is involved in the distribution of
the tips or if tips are used to help bring
up employees earnings to the minimum wage
level.
Chas Roy-Chowdhury, Head of Taxation at the
Association of Chartered Certified
Accountants (ACCA), said: "Previously, the
Revenue insisted that NICs were paid on all
tips. This new ruling means that NIC will
only be payable on money collected within a
so-called 'tronc', or staff pot, that is
used to top up an employee’s salary to the
NMW level, or in cases where the employer is
in some way involved in their allocation.
If your business has faced fines in the
recent past for not paying the correct
amount of NIC’s on tips you may also be able
to arrange a partial negotiation on those
previous fines.
HM Customs & Revenue (HMCR) have published
an updated version of their guide to tips
and service charges.
You can find it at the HMCR website here.
As with all tax changes; you should check
the regulations carefully and get advice
from HMCE or taxation specialist before
leaving the payments out of your NIC
calculations.
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