Tips and Tax
How to declare your tips through HMRC
Paying taxes is part of life, and tips, regardless of how you collect them, are taxable!
We pride ourselves in having designed our platform to the highest standards of legal and financial compliance. So, when HMRC offered us clearance for TiPJAR as a way of collecting tips, they asked us to remind all of our users that because TiPJAR tips are yours, and yours alone (just like cash tips) it’s up to you to declare them for tax purposes (just like cash tips!).
Remember, you are allowed to earn up to a certain amount without paying tax – a total of £12,500 per year as of April 2021 – so if you’ve earned less than that overall you won’t have to pay any tax.
Now, I completely understand that the idea of completing a tax return is terrifying for some, but this shouldn’t be the case. Completing a tax return and declaring your earnings can provide a welcomed understanding of your finances and empower you towards financial emancipation, ensuring you know exactly where a portion of your hard-earned money is going – towards the greater good.
At TiPJAR we think paying tax is a good thing – it’s what makes us a society. We think of tax as how we say “thank you!” to the people who make sure our country runs smoothly and keep us safe – our doctors and nurses, our fire-fighters and police forces; the people who build and maintain our roads and public spaces; and the people who care for those less fortunate than us that need some help.
So, if you need to declare your TiPJAR tips, here’s how you do it:
How to delcare tips if you are self- employed
You can include tips on your self-assessment tax return along with all your other self-employed earnings. Simple!
How to declare tips if you are employed
The first step is to register with HMRC to access your Personal Tax account here.
Regardless of whether you need to do this to declare tips – it’s great for anyone to do.
It lets you see everything your employers have told HMRC about your earnings as well as the tax and national insurance they’ve deducted and paid to HMRC on your behalf. It’s a great way of making sure you’re employer is doing everything they should be!
Once you have registered, you’ll be able to login and see your tax records. To declare tips you’ve earned, choose “Pay As You Earn” and then “Check Current Tax Year”
You’ll see what you’ve earned and tax you’ve paid in the year. To let HMRC know about your tips choose “Add missing income from another source”
Choose “Current Tax Year”
Choose “Yes” next to “Do you have other income that is missing”
Choose “Tips” and fill in the amount you’ve earned in the year
Choose “Current Tax Year.”
And you're done!
Now, HMRC will adjust your tax code very slightly, and you’re good to go!
Want to read more about our HMRC clearance?
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