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Janets Blog 11th July 2014

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Optional gratuities automatically added to restaurant bills: Are we becoming more accepting?

 

I was told that TIPS came from: ‘To Insure Prompt Service’ and were paid up front to bank clerks to guarantee that, if you were in a hurry, you would be served ahead of others… whether that is true or not is debatable but it does sound plausible.

More and more restaurants are adding gratuity to the bill automatically now and someone recently asked me if I thought customers were becoming more accepting of restaurants that did this.

Years ago, before HMRC started taxing gratuity as income, payroll managers didn’t care how much cash waiters where earning as tips. In fact the only issue with tips was the continual arguments between the staff themselves as to who got the best section. (I remember one waiter taking all the chairs from another waiters section and shoe-horning them into his!) Then, as less people carried cash, tips started to be distributed to staff via debit and credit cards. So, through default, gratuities filtered through the accounts alerting the tax man to a new source of taxable income. Then restaurants became responsible for declaring a certain percentage of tips on behalf of the staff via PAYE….and BOY! Suddenly it was all very complicated.

I’m not a restaurant manager anymore, and I’m sure much has changed in how tips are declared that I am unaware of, but frankly, I CAN see why restaurant owners would declare the whole bally lot by adding it at the bottom of the bills just to make it easier account wise. That said, restaurateurs would prefer it if they didn’t have to get involved at all. They would prefer that tips were not taxable as they have to pay their staff more for doing the same work. What’s more…get this….if gratuities are not declared on the bill as ‘optional’ we would have to pay VAT on top!

Sadly, from a customer point of view, something which historically has been paid as a ‘thank you’ to staff now feels like is it being extorted from us. For the waiters, if you are good, tips make up a big part of your income but now this has been reduced by 20%.

But maybe we should all wake up and smell the coffee. At the end of the day we can still chose to pay the gratuity or not BUT it is a taxable income and it does have to be declared so adding it to the bottom of the bill does kind of make it easier for everyone….doesn’t it?