How do I declare tax on tips?

Declaring tax on tips is a common question many of our users have, and we are here to help you understand the process clearly. Whether you’re a business owner, self-employed, or an employee on payroll, we aim to answer all your questions and put your mind at ease. Here’s how you can manage your tax responsibilities with tips earned via EasyTip:

For Businesses:

Q: How can my business handle taxes on tips collected via EasyTip?
A: EasyTip offers an "employer reporting" option. This sends gross tips directly to your business's bank account, allowing you to withhold taxes via PAYE. This method shifts the tax reporting responsibility from employees to the employer.

For Self-Employed Staff:

Q: How do I, as a self-employed person, report my tips earned through EasyTip?
A: You'll need to report your tips as part of your annual self-assessment. The EasyTip app helps you track your earnings over any period, making it simple to report accurately.

For Employees on Payroll:

Q: Can I report my tips individually even if I’m on payroll?
A: Yes, you can. There are two ways to report your tips:

• Self-Assessment: Include your tips in your annual self-assessment.
• Update Tax Code: If your additional earnings are up to £2,500 per year, you can report them without completing a tax return. Simply write to HMRC, informing them of your collected tips and request an update to your tax code. This way, you'll pay tax via PAYE in the following tax year.

Using EasyTip, both businesses and individuals can efficiently manage tip earnings and stay compliant with tax regulations.