Glover Stanbury | Chartered Accountants | Barnstaple & Bideford | Devon
Barnstaple: 01271 375271
info@gloverstanbury.co.uk
Bideford: 01237 471881
Facebook
Twitter
LinkedIn
  • Home
  • Who we are
    • The difference
    • The firm
    • Meet the team
    • Current vacancies
  • What we do
    • Business services
      • Business-services
      • Accounting & bookkeeping
      • Fees protection insurance
      • Audit
      • Business planning
      • Business start up
      • Company secretarial
      • Corporate finance
      • Corporate tax planning
      • Mergers and acquisition
      • Payroll
      • Vat
    • Individuals
      • Individuals
      • Estate planning
      • Personal tax planning
      • Retirement strategies
      • Self assessment
      • Trusts and Executorships
    • IT accounting software
      • IT accounting software
      • Accounting software
    • Specialisms
      • Specialisms
      • Business sectors
      • Financial services
      • Forensic accounting
  • Resources
    • Business Tools
    • Downloadable forms
    • Tax tables
    • Useful links
  • News & testimonials
    • Latest newsletter
    • Newsletter signup
    • Business tools
    • Blog
    • Testimonials
  • Xero
  • Bookkeeping
  • Fees Protection Insurance
  • Portal
  • Contact

New rules on distributing tips: Understanding the Employment (Allocation of Tips) Act 2023

July 1, 2024gloverstanburyUncategorized

On 1 October 2024, the Employment (Allocation of Tips) Act 2023 will come into effect, introducing significant changes to how tips are managed and distributed in the hospitality industry.

This legislation aims to improve fairness by mandating that all tips, gratuities, and service charges are allocated fairly among employees. The new rules address longstanding concerns about the retention and distribution of tips by employers, ensuring transparency and fairness.

Summary of the New Rules

  1. Fair Distribution: Employers must distribute all tips, gratuities, and service charges fairly and equitably among workers. This includes both cash and card tips. The distribution has to be fair and transparent with due regard to a Code of Practice and can include a tronc arrangement.
  2. No Deductions: Employers are prohibited from making any deductions from tips, including administrative fees. The only exceptions are those required by law (e.g. tax).
  3. Transparency: Employers must clearly communicate their tipping policies to employees and customers, ensuring transparency in how tips are allocated.
  4. Record-Keeping: Employers are required to keep detailed records of all tips received and distributed for a period of three years. These records must be made available to employees upon request.
  5. Written Policy: A written policy outlining the distribution of tips must be in place and accessible to all staff members.
  6. Service Charges: Any service charges added to bills must be treated as tips and distributed accordingly.

Impact on Employers

If you are an employer affected by the rules, you will likely need to make some changes in how you manage tips. It will be crucial that you comply with these regulations to avoid potential penalties and to maintain a fair working environment.

Here are the key impacts with some suggestions for procedures that affected employers will need to consider:

  1. Review and Update Tipping Policies: Employers will need to review their current tipping policies and make sure they line up with the new rules. They will need to establish a clear and equitable distribution method that is communicated to all employees.
  2. Implement Transparent Systems: Employers should implement transparent systems for tracking and distributing tips. This might involve using software solutions that automatically record and allocate tips based on predefined criteria.
  3. Employee Training: Training sessions should be conducted to inform employees about the new rules and how tips will be managed. This ensures everyone is aware of their rights and the procedures in place.
  4. Maintain Accurate Records: Employers must establish robust record-keeping practices to document all tips received and distributed. These records should be maintained for at least three years and be readily accessible for inspection by employees or regulatory bodies.
  5. Communicate with Customers: Clearly communicate tipping policies to customers, possibly through notices on menus or at the point of sale. This transparency helps manage customer expectations and ensures they understand how their tips will be used.
  6. Regular Audits: Conduct regular audits to ensure compliance with the Act. This helps identify and rectify any discrepancies or non-compliance issues promptly.

By implementing these procedures, employers can not only comply with the new rules but also foster a fairer and more transparent working environment. This can enhance employee satisfaction and trust, ultimately benefiting the overall business.

If you need any help with the new rules or applying the Code of Practice, please feel free to get in touch and we will be happy to help you.

See: https://www.gov.uk/government/consultations/distributing-tips-fairly-draft-statutory-code-of-practice/draft-code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version

gloverstanbury
Previous post Buying a second home: what should you think about? Next post Beware the 60% income tax trap

Recent Posts

  • Making Tax Digital for Income Tax – An update
  • HMRC using third-party information to target landlords
  • Benefits in kind: Mandatory payrolling from 6 April 2027
  • HMRC targets side hustle
  • HMRC contacts self-employed people about National Insurance gaps

Recent Comments

    Archives

    • September 2026
    • August 2026
    • July 2026
    • June 2026
    • May 2026
    • April 2026
    • March 2026
    • February 2026
    • January 2026
    • December 2025
    • November 2025
    • October 2025
    • September 2025
    • August 2025
    • July 2025
    • June 2025
    • May 2025
    • April 2025
    • March 2025
    • February 2025
    • January 2025
    • December 2024
    • November 2024
    • October 2024
    • September 2024
    • August 2024
    • July 2024
    • June 2024
    • May 2024
    • April 2024
    • March 2024
    • February 2024
    • January 2024
    • November 2023
    • October 2023
    • September 2023
    • August 2023
    • June 2023
    • April 2023
    • March 2023
    • February 2023
    • January 2023
    • December 2022
    • November 2022
    • September 2022
    • August 2022
    • July 2022
    • June 2022
    • May 2022
    • March 2022
    • February 2022
    • January 2022
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • July 2020
    • May 2020
    • March 2020
    • February 2020
    • October 2019
    • May 2019
    • March 2019
    • February 2019

    Categories

    • Uncategorized

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    The Firm

    At Glover Stanbury, all of our services are designed to add significant value to your business and personal wealth. read more

    Facebook
    Twitter
    LinkedIn

    Latest Blog

    • Making Tax Digital for Income Tax – An update September 11, 2026
    • HMRC using third-party information to target landlords September 11, 2026
    • Benefits in kind: Mandatory payrolling from 6 April 2027 September 11, 2026

    Certification

     

    Website security

     

    Girl in a jacket

    © Glover Stanbury. All rights reserved. | Privacy Statement | Cookie Policy | Terms & Conditions | Website creation and hosting - Docusoft.