Tips and pay
Tips, service charges, and minimum wage
Tips can affect take-home money, but they should not be used to make up the legal National Minimum Wage rate.
Tips do not count towards minimum wage
GOV.UK says tips at work do not count towards the National Minimum Wage. A worker's base pay still needs to meet the legal hourly rate for the relevant pay reference period.
If your hourly wage only reaches the minimum after adding tips, voluntary service charges, or gratuities, that is a warning sign to run a minimum wage check on base pay and hours first.
Tax and National Insurance can still apply
Tips may still be taxable. Whether Income Tax or National Insurance is deducted depends on how the tip is paid and how tips are managed at work, including whether a tronc is used.
Compulsory service charges can be treated differently from voluntary tips. For minimum wage checks, keep the NMW calculation separate from the tax treatment of tips.
2026 tipping reform to watch
The government has published its response to the consultation on strengthening tipping law. The updated code and new requirements are expected to come into effect in October 2026, subject to parliamentary approval and commencement regulations.
The current GOV.UK worker guidance says all tips must be given to workers without deductions, and refers to a statutory code of practice on fair and transparent distribution of tips.