There is no income tax equivalent of the NICs gratuity
disregard. All tips, gratuities and service charges fall within the
definition of earnings in section 62 of ITEPA 2003. See EIM07900.
If an organised arrangement exists for tips to be shared
among employees by a person who is not the principal employer, the
principal employer must notify HMRC about the arrangement. When
this is done a PAYE scheme may be set up for the arrangement
(usually known as a tronc) for the purpose of operating PAYE on the
tips. Where a ‘tronc’ PAYE scheme is opened the person
held responsible for compliance with PAYE legislation is the person
who shares out the tips (usually known as the
‘troncmaster’). This is relevant when trying to
establish facts to determine whether condition 2 of the gratuity
disregard applies (
NIM02922). For more guidance about PAYE
see the Pay As You Earn On-Line Manual ‘Tips, Gratuities,
service charges and troncs’.
