Credit card tips can be disregarded as earnings for NI purposes if a Tronc Master independently stipulates what cash amounts are payable to individual employees.

This would not be allowed if the tips are directly or indirectly allocated by the employer. In some situations this may be carried out by a manager (who would normally represent the employer) providing he/she is free to decide the allocation without interference from the employer.

Details of the payments would need to be recorded in an acceptable way (to HMRC) in order that they are clearly identified on pay slips and therefore free of NI deduction. Payments of tips in this way will still attract deductions for PAYE.

With effect 1 October 2009 employers are barred from using tips, service charges, cover charges etc to make up low basic wages to the national minimum wage.