The bloody service charge!

[Ilovemychocolate]

Went out to eat twice yesterday…we are in Bath for a festive visit.
Both times our bill came with service charge added.
Both times I sent it back and requested they remove the service charge.
Now I know it’s Christmas, but adding the service charge, without informing the customer it’s completely their choice to pay it, is a year round practise.
I am not against tipping, but it infuriates me when it’s automatically added to my bill with the expectation I will pay it!
An I unreasonable to ask the restaurant to remove it every time?

I’ll explain.

VAT is added to any food and drink if it’s consumed on the premises.

The service charge is not a Vatable cost BUT the employee pays income tax on that earning.

Even if you pay that service charge or tip in cash a server will be liable to pay income tax on that cash tip.

The government is very strict on this and actually estimates cash tips on sales for tax purposes but the restaurant has to disclose this amount to the revenue.

vat and income tax are not the same thing.

Most take away food however is not subject to vat.

So when prices are more to eat in that takeaway it is actually vat that you are paying .

... no one wants to see the UK & Europe going down the north americain route where tipping is expected at 20% or more (40% according to a recent tweet I saw)

That 40% probably represents the tip wished for rather than tips normally given, @IhadaStripeyDeckchair - like when you use a public loo in europe and find a dish hopefully sprinkled with 1 and 2 euro pieces

Another ruse I've seen is the "attempted shame" when a huge service charge is added on and a customer objects: "Oh I'm so sorry, that's what our regulars usually pay and I made a mistake"

Gouging, all of it; just leave the customer to make their own mind up and stop all this pretence

How to win friends and influence people

If wait staff take a similar attitude towards their customers it's perhaps not surprising if they don't get tipped

Unless you’re in America, you don’t need to pay a service charge or tip; the employer pays their staff to do their jobs. Tipping is for exceptional service if the customer can afford to - it shouldn’t be an expectation.

Always an excuse to justify not tipping

yawn!

Now I didn’t know the service charge wasn’t VAT able. All the restaurant bills I’ve seen lump it all in together. I would have thought they’d have to allocate it differently to show. Eg when I invoice I have to show what is 0% Vat, 5% and 20%. Maybe I should ask for a VAY receipt every time!

I also didn’t know that about tips. How on earth can HMRC estimate the tips people get? Is that really true? As a student I was certainly never asked what tips I got, not taxed in it but that was 20 years ago b

I’ve only ever seen a restaurant bills with service extra and a total of VAT. I worked it out somewhere once and it was included so maybe that restaurant got it wrong.

Its only VATable if its a mandatory service charge.

HMRC would only estimate tips given direct to the staff if they suspected they werent reporting what they were receiving in cash via self-assessment, so an unlikely scenario unless 4/5 staff were reporting and 1 wasn't or someone was grassed up etc

Always as excuse not to keep up with posts which make clear the poster is happy to tip - or pay a service charge, but not both

Yawn

The TRONC system (although it was introduced in the early 20th century) didn’t become widely implemented in the hospitality industry until circa 2000 I believe. At this time most tips and many bills for that matter were paid in cash.
Wait staff generally kept their individual tips and tipped out other staff members such as the table clearers etc. All staff were responsible for declaring cash tips on their tax return, although I’m not sure how many did this!

Around 2000 things changed a bit and more people were paying with cards.
The current system was made law in 2023 I think. If the restaurant pools all tips and re-distributes to all staff (which many do) the employer is then responsible for reporting these amounts, including any deductions for employee tax.

So if you choose to give a cash tip ‘under the table’, the inland revenue could lose out and the other staff who rely on the tips, such as the dish washers the poorest, often very young guys would also lose out.

Generally it’s a fair system if you understand that service is part of all staff’s the wages but it’s dependent on how well they perform.

One very good argument for keeping service charge as an addition to the bill total is that it incentivises the staff to work harder for the customer. If the service was absorbed into the food price you would not have the option to refuse should the service be awful.

I think there are so many posters on here who know nothing about the industry and to suggest all a waiter does is take food from the kitchen to the take says it all.

FYI - If tips are discretionary there is no VAT added on the service element.
If you check your total you will see that the VAT isn’t 20% of the total bill.

I don't really get optional service charges. I would much rather they increased the price of the meal to cover staff costs and then not guilt & force me into a charitable deed that is often disproportionate and unfair to tipping arrangements for other minimum wage services.

One very good argument for keeping service charge as an addition to the bill total is that it incentivises the staff to work harder for the customer. If the service was absorbed into the food price you would not have the option to refuse should the service be awful.

I always ask if the staff get the service charge, if they do I pay it instead of a tip.

i think it’s nice to leave a tip but I think it’s fair enough for you to choose what u want to leave

@Newdaysameday
"One very good argument for keeping service charge as an addition to the bill total is that it incentivises the staff to work harder for the customer. If the service was absorbed into the food price you would not have the option to refuse should the service be awful."

What a joker, no matter what job you have chosen to do you should do it properly regardless of how much you're getting paid! Sounds like you're saying we're paying extra for fake pleasantries 😂 what about if other minimum wage employees did a rubbish job unless each customer bunged them a tip. If people aren't doing their job to the correct standard they should be fired.

For those saying they can't run their business without tips, then to your business isn't viable.

Regarding the apparent shortage of staff if all tipping and service charges were stopped with immediate effect it would all even out quite quickly. Good places would continue to attract custom and could choose to raise prices slightly if they wanted to. Some people might choose to not wait on anymore as they're just after the tips but they'd eventually be replaced by others who are happy to provide service with a smile.

Tell me you’ve not run a restaurant without telling me

🤣

I always pay 10% anyway so don’t mind it being added. It’s pretty standard now. I’d never request it be removed

Restaurants that add it invariably state on the menu that it will be added. Therefore YABU as you know they will before you know order. And yes - unless it’s crap service, you are being miserable not to pay it.

@carconcerns Very well explained, thank you.

Isn’t it telling that not one person here has been able to justify waiting staff getting tips or money from the service charges for doing the job they’re paid to do?

We already accept bonuses and commission in loads of jobs - why is it suddenly immoral when service staff are rewarded for good service?

Customers don't pay the bonuses.

Because giving good service is part of the job that they’re paid to do, as explained many times on this thread. It’s nothing to do with morals.

Of course they do.

customers always pay all wages and bonus!

I am NOT saying that at all. There is no comparison between those PROFESSIONS and I do not denigrate the heartbreaking, difficult and highly skilled jobs of carers. I do know about them and have also seen them in real life.

Waiting staff who have been properly trained do more than just carry plates, I worked as a trained Silver Service Waitress, more is going on than you see. It's a bit like icing on a cake: you only see the dressing.

Waiting staff who have been properly trained do more than just carry plates, I worked as a trained Silver Service Waitress, more is going on than you see. It's a bit like icing on a cake: you only see the dressing.

We all know it’s not just carrying plates. The role profile will be clear on the contract. The waiting staff member doesn’t necessarily work any harder than anyone else getting paid NMW for a different job.