Understanding the impact of the new tipping legislation: A guide for salon owners

By Mark Ronayne on May 2nd, 2024

As salon owners gear up for the implementation of new tipping legislation this July, it’s essential to understand the implications and navigate the changes effectively. With Mark Ronayne, Head of Payments at Phorest’s background in Payments, Tax, and Accountancy, including prior experience at the Tax office, he’s here to shed light on what salon owners need to know about the upcoming legislation and how it will affect their operations.

The new legislation introduces significant changes to tipping practices in the hair and beauty industry. Firstly, it mandates that 100% of tips or service charges left by customers must be paid directly to employees, with employers prohibited from deducting any charges for administrative or transactional purposes. This ensures that employees receive their rightful share of gratuities without any deductions.

Secondly, the legislation emphasises transparency and fairness in tip allocation. Salon owners are required to have a clear written policy outlining how tips are collected and distributed, with changes communicated to employees. This promotes accountability and ensures that all employees are treated fairly in the distribution of tips.

Lastly, salon owners must withhold and pay taxes, including PAYE and National Insurance contributions, on all tips received. This ensures compliance with tax regulations and prevents any potential tax liabilities for salon owners.

This is where solutions like our new-to-launch, PhorestTips come into play. By integrating seamlessly with existing payment infrastructure, PhorestTips simplifies the collection and distribution of tips, allowing salon owners to focus on providing exceptional service to their clients.

With detailed reporting capabilities, PhorestTips also facilitates tax compliance by providing salon owners with the necessary documentation to track and manage tips effectively. This not only simplifies the tax reporting process but also ensures that salon owners remain compliant with tax regulations.

In conclusion, understanding the impact of the new tipping legislation is crucial for salon owners as they prepare for the changes ahead. By prioritising transparency, fairness, and compliance with tax regulations, salon owners can navigate the complexities of tipping practices effectively and keep your team happy by being tax compliant, too. With solutions like PhorestTips, salon owners can streamline their operations and focus on what they do best – delivering exceptional service to their clients.

Learn more about the new legislation and tax compliant PhorestTips system to benefit your salon, employees and clients, visit:

www.salontippingcompliance.co.uk and www.phorest.com  

Mark Ronayne

Mark Ronayne is head of Payments at Phorest salon software, and has a background in tax, accountancy, and prior experience at the Tax office

All articles by Mark Ronayne

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