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If the Company take 20% out of the tips, that is the VAT element but the company will not pay 20% to the C & e, they will pay 20% less their input tax. If it is a means of fairly sharing the tips with the backroom people, rather than than the bar staff getting it all, then that might be a gain for the kitchen.

Are HnB suddenly in sympathy with Alf Cannan or is this a directive from the Treasury?

Best is to leave it as is, ie. the bar staff get the tips and the kitchen staff get paid more?.

 

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15 minutes ago, Kopek said:

If the Company take 20% out of the tips, that is the VAT element but the company will not pay 20% to the C & e, they will pay 20% less their input tax. If it is a means of fairly sharing the tips with the backroom people, rather than than the bar staff getting it all, then that might be a gain for the kitchen.

Are HnB suddenly in sympathy with Alf Cannan or is this a directive from the Treasury?

Best is to leave it as is, ie. the bar staff get the tips and the kitchen staff get paid more?.

 

We really have hit rock bottom if we're taxing a few coppers gifted to minimum wage (or less) worker's!

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If this is true, I think it is likely that income tax is at the bottom of it, not H&B profits or VAT. Gratuities given freely to staff are outside the scope of VAT, and I would very much doubt that H&B are among those unscrupulous employers who insist on taking a cut of the tips for themselves. Perhaps the Income Tax Division has had a quiet word? As has been said above, tips are taxable income and indeed this is nothing new. Many years ago back in the UK when I was much younger and wetter, I did some poorly remunerated bar work as a second job. The basic bar wage was taxed by the pub on an SB (0T in the UK) standard rate code and, to add insult to injury, not only did the Inland Revenue tax your tips, they ASSUMED the level of tips you would get and taxed you accordingly via an adjustment to your PAYE code and deducted it at source from your main employment salary. They made no allowance either for whether you were a pretty girl or a hairy beardy git like me. Total bastards.

This led to me jacking the job in as I would rather forego the pay than give them the tax.

Edited by woolley
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5 hours ago, woolley said:

If this is true, I think it is likely that income tax is at the bottom of it, not H&B profits or VAT. Gratuities given freely to staff are outside the scope of VAT, and I would very much doubt that H&B are among those unscrupulous employers who insist on taking a cut of the tips for themselves. Perhaps the Income Tax Division has had a quiet word? As has been said above, tips are taxable income and indeed this is nothing new. Many years ago back in the UK when I was much younger and wetter, I did some poorly remunerated bar work as a second job. The basic bar wage was taxed by the pub on an SB (0T in the UK) standard rate code and, to add insult to injury, not only did the Inland Revenue tax your tips, they ASSUMED the level of tips you would get and taxed you accordingly via an adjustment to your PAYE code and deducted it at source from your main employment salary. They made no allowance either for whether you were a pretty girl or a hairy beardy git like me. Total bastards.

This led to me jacking the job in as I would rather forego the pay than give them the tax.

When I read the OP comments I thought that perhaps Income Tax was behind this as well.

And my immediate reaction was..... there's a barrel that needs scraping!

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14 hours ago, rodders said:

I got told this by a chef that works for the brewery.  bloke down the pub

I corrected you post for clarity.

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Danger here is that IOMG will now give Chefs/cooks a tax code that assumes they are receiving tips

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Tips are taxable and have been since at least 1946. Anyone receiving tips should declare them on their tax return and pay whatever is due.

Section 2 of the Income Tax Act 1970 (and you will see from the margin note that the root clause was from the 1946 Act) https://www.legislation.gov.im/cms/images/LEGISLATION/PRINCIPAL/1970/1970-0003/IncomeTaxAct1970_35.pdf

"gratuities made to or received by any employed person by reason of or in the course of his employment"

 

That said, the tax office has issued nothing recently which indicates a crackdown on tips and I agree that its hardly likely to be a big issue for Alf (especially as the general consensus is that restaurants and service is shit here in any case).

This will be an H & B thing if indeed its true. Most likely connected to distribution of tips made by card.

 

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4 minutes ago, piebaps said:

Tips are taxable and have been since at least 1946. Anyone receiving tips should declare them on their tax return and pay whatever is due.

Section 2 of the Income Tax Act 1970 (and you will see from the margin note that the root clause was from the 1946 Act) https://www.legislation.gov.im/cms/images/LEGISLATION/PRINCIPAL/1970/1970-0003/IncomeTaxAct1970_35.pdf

"gratuities made to or received by any employed person by reason of or in the course of his employment"

 

That said, the tax office has issued nothing recently which indicates a crackdown on tips and I agree that its hardly likely to be a big issue for Alf (especially as the general consensus is that restaurants and service is shit here in any case).

This will be an H & B thing if indeed its true. Most likely connected to distribution of tips made by card.

 

I'll stick my neck out here and guess that not many people declare tips on their tax returns. There, I've said it...

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5 minutes ago, Neil Down said:

I'll stick my neck out here and guess that not many people declare tips on their tax returns. There, I've said it...

Many bar staff don't work enough hours to reach the lower tax threshold.

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42 minutes ago, Neil Down said:

I'll stick my neck out here and guess that not many people declare tips on their tax returns. There, I've said it...

Pointless doing that if you work in food service or - presumably - hairdressing

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7 hours ago, Donald Trumps said:

Pointless doing that if you work in food service or - presumably - hairdressing

Why should tips be subject to tax ? FFS has this world gone completely mad ?.

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11 minutes ago, dilligaf said:

Why should tips be subject to tax ? FFS has this world gone completely mad ?.

Our government has,  desperate to ensure it's own pensions roll in unabated.

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Just now, finlo said:

Our government has,  desperate to ensure it's own pensions roll in unabated.

I remember working as a taxi driver and the tax office assuming what tips I received. I don't remember any CS tipping that well if at all tight twats

I am all for user pays and all being equal, but if I have paid my tax on my income, then go for a meal and receive good service. Why should any tip I give be subject to even more tax, when paid to someone earning a shit wage. ?

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11 minutes ago, dilligaf said:

I remember working as a taxi driver and the tax office assuming what tips I received. I don't remember any CS tipping that well if at all tight twats

I am all for user pays and all being equal, but if I have paid my tax on my income, then go for a meal and receive good service. Why should any tip I give be subject to even more tax, when paid to someone earning a shit wage. ?

Welcome to the real IOM!

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8 hours ago, GD4ELI said:

Many bar staff don't work enough hours to reach the lower tax threshold.

Then some twat taxes their tips.

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