Tips and Tax

How to declare your tips through HMRC*

*Please not that the information below does not apply to users of our Supertronc Product. We do all of that reporting for you. For more information please look here.

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 it comes to tax and TiPJAR, here’s what you need to know.

TiPJAR works in two ways.  If you get tips your employer has collected for you through our Supertronc product, then all your tax is taken care of and you don’t need to do anything!

TiPJAR also works as a cash-equivalent system – meaning the tips go straight from your customer to you, just like cash.  When HMRC offered us clearance for TiPJAR as a way of collecting cash-equivalent tips, they asked us to remind all of our users that because these 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!).  

Now, I completely understand that some of us find having to deal with tax worrying, but this really shouldn’t be the case! Understanding how to declare your earnings can provide a welcome understanding of your finances and empower you, ensuring you know exactly where a portion of your hard-earned money is going – towards the greater good.

Remember, you are allowed to earn up to a certain amount without paying tax – a total of £12,570 per year as of April 2023 – so if you’ve earned less than that overall you won’t have to pay any tax at all.  After that you’ll pay tax based on what you earn, and how much you pay will depend on whether you live in Scotland or the rest of the UK – check here for the full picture!

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

If you’re self-employed you’ll already have to submit a self-assessment tax return to HMRC every year.

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 your employers have done everything they should have and to see what you’ve earned historically.

You can even check to make sure everything is accurate, and if it’s not, contact HMRC and tell them.  HMRC understand that their systems can be complicated for individual taxpayers, so they genuinely want to help and explain everything in the simplest way they can. They want to make sure we all pay the right tax, not more tax than we should.  

They’ll be the first to make sure you get tax back if you’ve paid too much!

If you’re employed and haven’t paid enough tax, HMRC understand no-one wants an unexpected bill, so for most of us who might owe a few extra pounds they’ll just make a small adjustment to your tax code and collect this over time from your salary.

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 Save and continue.

And you're done!

Now, HMRC will let your employer know to adjust your tax code very slightly, and you’re good to go!

You can do this as often as you would like, but most people do this either once per month, or once per year in late March, to confirm the tips they’ve earned in the year.

Want to read more about our HMRC clearance?

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