Status at 22 October 2026: the 2024 law is in force; one extra duty is not
The Employment (Allocation of Tips) Act 2023 and its statutory Code of Practice have applied since 1 October 2024. A further duty, to consult your workers when you write or review your tipping policy, was added by section 14 of the Employment Rights Act 2025 but is not yet in force. The government withdrew a revised Code in July 2026 and ran a new consultation from 19 August to 29 September 2026. GOV.UK says employers should keep following the existing Code for now, and has not given a start date.
The short version
- Pass it all on. Tips, gratuities and service charges you receive, or control or significantly influence, belong to your workers. Acas says you can deduct only usual tax and National Insurance.
- Share it fairly. Use a clear, objective set of factors, such as hours worked or role. Equal shares are not required.
- Pay on time. No later than the end of the month after the month the tips were paid.
- Write a policy and keep records. You need both if qualifying tips are paid more than occasionally. Keep records for three years from the date each tip was paid.
- Answer requests. A worker can ask to see their records once every three months.
This guide covers England, Scotland and Wales, not Northern Ireland.
Which tips are covered
The test is not how the customer paid. It is whether you receive the tip, or control or significantly influence how it is shared.
| Situation | Covered by the law? |
|---|---|
| Card tip taken on your card machine, or paid to you through a card scheme | Yes |
| Service charge added to the bill | Yes, whether it is voluntary or compulsory |
| Cash in a jar that you collect and share out, or that you tell staff how to split | Yes |
| Cash a customer hands to a worker who keeps it, with no involvement from you | No |
| A digital tip paid straight to the worker through an app, bypassing you | No |
| A voucher or casino chip with a fixed money value | Yes |
| A gift such as a bottle of wine that cannot be divided or swapped for cash | No |
Self-employed people are not covered. Agency workers placed with you are, and you count as their employer for this purpose.
What you must do
- Do not keep any of it. Qualifying tips go to workers without deductions other than tax and National Insurance. Acas does not list card processing fees as a permitted deduction.
- Allocate fairly. The Code says to use a clear and objective set of factors that are fair and reasonable. Examples it gives include type of role, hours worked, performance, seniority and length of service. Avoid anything that could discriminate against a group.
- Pay by the deadline. See the table below.
- Have a written policy if qualifying tips are paid on more than an occasional and exceptional basis. The Code’s example of a business that would not need one is a clothes shop that gets a tip a few times a year.
- Keep records. For each qualifying tip, record what you received, what you paid to each worker, and anything you passed to a troncmaster. Keep them for three years from the date the tip was paid.
- Respond to requests. See the section on requests below.
The pay-out deadline, month by month
The rule is the end of the month after the month the tips were paid. The Code’s example: a tip left on 23 June is due by 31 July.
| Tips paid in | Latest pay-out date |
|---|---|
| October 2026 | 30 November 2026 |
| November 2026 | 31 December 2026 |
| December 2026 | 31 January 2027 |
| January 2027 | 28 February 2027 |
| February 2027 | 31 March 2027 |
| March 2027 | 30 April 2027 |
| April 2027 | 31 May 2027 |
| May 2027 | 30 June 2027 |
| June 2027 | 31 July 2027 |
| July 2027 | 31 August 2027 |
| August 2027 | 30 September 2027 |
| September 2027 | 31 October 2027 |
A simple way to stay inside the deadline is to pay out with each month’s wages.
A worked example: sharing by hours
A café collects £1,200 of card tips and service charge in a month. Four staff worked 300 hours between them.
| Worker | Hours | Share of hours | Tips |
|---|---|---|---|
| A | 120 | 40% | £480 |
| B | 80 | 26.7% | £320 |
| C | 60 | 20% | £240 |
| D | 40 | 13.3% | £160 |
| Total | 300 | 100% | £1,200 |
Each share is the pot × the person’s hours ÷ total hours. A points system works the same way: give each role points per hour, multiply, then share the pot by points. Write the factors in your policy, apply them the same way every month and keep the calculation with your records. Pay-outs are still subject to tax and National Insurance through payroll.
Your written policy
The Code says the policy must set out how tips are accepted, how they are allocated and distributed, and the steps you take to make sure that is fair and transparent. It must also:
- be in plain language, and in an accessible format if a disabled worker asks for one
- be available to every worker on the same terms, including agency workers
- be communicated to everyone when it changes, from the day the change takes effect
The Code also says employers should consult workers to seek broad agreement that the system is fair, and should review it regularly as staff change. Support for a method must be genuine, not pushed by managers.
Records and staff requests
A worker can make one written request every three months. It can cover up to three years back, but only the period they worked for you. The response shows the total qualifying tips you received at that place of business in the period and what was allocated to that worker, not what other workers were paid. Acas says you must supply the records within four weeks.
Keep the records in line with data protection law. A monthly ledger, a calculation sheet and a log of requests and replies is enough for most small businesses.
If you use a tronc
A tronc pools and shares out tips, run by a troncmaster, who can be a worker chosen by staff or an independent operator such as a payroll firm. You are still responsible for the scheme being fair and transparent. If it is not, you must act: ask for a change, replace the operator or end the arrangement. Tax and National Insurance on tronc payments are a payroll question for your accountant.
What is still to come
Section 14 of the Employment Rights Act 2025 will add three things to the tipping policy rules:
- you must consult workers (through a recognised union or elected representatives, or directly if there are none) before you make your first policy
- you must review the policy, with consultation, at least every three years
- you must share an anonymised summary of the views with all workers at the place of business
Section 14 is marked on legislation.gov.uk as not yet in force. Acas says it expects the change by the end of 2026, but we found no start date from the government. A revised Code of Practice must come first. Nothing here is a legal requirement today, but the current Code already encourages consulting staff, so doing it now costs you little.
If something goes wrong
A worker can go to Acas and then to an employment tribunal, which can make a declaration, order you to revise an allocation and order compensation. Acas says that for a missing policy or records a worker may have only three months less one day to claim, and you could be ordered to pay up to £5,000.
Frequently asked questions
Do I need a policy if tips are rare?
Only if qualifying tips are paid on more than an occasional and exceptional basis. The Code gives the example of a clothes shop that receives a tip a few times a year. If you take card tips every week, you need one.
Are tips paid straight to staff through an app covered?
Not if the customer pays the worker directly and you have no control or significant influence over it.
Can I take the card fees off the tips?
Acas says only usual tax and National Insurance may be deducted, and does not list card processing fees. Get advice before deducting them.
Sources
Last checked 22 October 2026.
- Code of practice on fair and transparent distribution of tips, GOV.UK
- Tips and service charges and Policies and records, Acas
- Tips at work, GOV.UK
- Employment Rights Act 1996, section 27D, legislation.gov.uk
- Employment Rights Act 2025, section 14, legislation.gov.uk
- Distributing tips fairly: revised statutory code of practice and Make Work Pay: revised tipping code of practice (consultation), GOV.UK
Changes to this guide
- 22 October 2026: Published.
This guide is general information written from the official sources listed above and checked on 22 October 2026. It is not legal, tax or financial advice, and Plainfiles is not endorsed by any government body. Rules change, so check the linked official pages for your own situation. Written and designed by Plainfiles with the help of artificial intelligence (AI) tools, then checked against the official legislation and guidance listed in the sources. How we write and check our guides.