HOSPA, the association for hospitality’s finance, revenue management, marketing, asset management and IT professionals, has released detailed guidance on tips, gratuities, service charges and troncs for those working in hospitality in a bid to provide a definitive understanding of their legal standing, taxability and definition.
The association, a not for profit educational organisation, has produced an in-depth, free and practical guide which looks to make long-established practices around tips and gratuities more transparent and fair, as well as highlighting practices which are no longer fit for purpose.
Compiled by experienced hospitality professionals, the guide offers an understanding for those working within the sector and covers a range of topics, which includes the following:
- The different types of tips and gratuities
- The definition of a service charge
- The legal ownership of gratuities
- An explanation of tronc schemes
- Their treatment in regard to:
- VAT
- National Minimum/Living Wage purposes
- Income Tax
- Class 1 National Insurance
- Contractual Agreements with Staff
Jane Pendlebury, chief executive of HOSPA, said: “Tipping is a time-honoured custom within the hospitality industry, but, as the understanding and approach to this has evolved and developed over the years – especially with the advances of technology – there’s an element of grey area and clouded understanding for both employers and employees alike when it comes to the legal definitions and where hoteliers and hospitality professionals stand in regard to tax and other considerations.”
She continued: “The guide sets out to provide a definitive understanding for those working within our sector, helping to clarify any misunderstanding or confusion and doing so in a way that’s as easily digestible as possible.”
Comprising 24 pages of detailed advice, the content was co-authored by Andy Hamman of BDO, an international network of public accounting, tax, consulting and business advisory firms, and Peter Davies of WMT, a firm of Chartered Accountants, who contributed their individual expertise, while the editing of the finalised guidance was conducted by Howard Field, a founder member and Honorary Fellow of HOSPA.
The guidance is housed on HOSPA’s website and can be accessed and downloaded via the following link: http://www.hospa.org/en/shop/product/tips-and-troncs-guide-free-download/
