How US-style tipping culture came to London

SubscribeSign in

How American tipping culture came to London<br>Plus: Andy Burnham's copy-and-paste pledge to the capital • Dawn Butler's mayoral fundraiser • The ongoing hunt for a luxury children's meal.

Jim Waterson, Polly Smythe, and Cormac Kehoe<br>Jul 14, 2026

110

26<br>15

Share

If you’ve stood at the bar while ordering a pint of beer, or ordered a coffee at the counter of a cafe in London, you might have been hit by the trend sweeping the capital: “optional” service charges automatically applied to purchases.<br>In the past, default service charges in the UK were limited to sit-down restaurants. Tipping culture, where you’re expected to add an extra payment on top at the moment you place your order, was a strongly resisted American affectation. If you were having a good night out, you might offer to buy a drink for the bar staff, or leave some money at the end of a meal, but that was the limit.

A sign at a bar in Peckham informing customers of a default 7.5% peak-time service charge on all orders.<br>Now, in the space of just a couple of years, that has completely changed. What began as a trickle has become a tidal wave. Service charges are being automatically applied to pints served in historic pubs, cocktails in bars, and takeaway coffees in cafes where your interaction with the barista lasts a few seconds.<br>Paying by card? Then you’ll increasingly be asked to choose which percentage you want to add on top, while the staff member looks on awkwardly, or just find that a service charge has been added by default.<br>But why?<br>It’s always tax

London Centric has been talking to hospitality operators and workers across the capital. They say there’s a holy trinity of factors which have combined to bring automatic tipping culture to London.<br>Firstly, and by far the biggest reason cited by operators, is increased taxes on employers. The key moment was chancellor Rachel Reeves’ decision to substantially increase the rate of employer national insurance from April 2025. She also, in a move that attracted less attention, massively reduced the exemptions for part-time staff, hitting many pubs and cafes.<br>Secondly, a law introduced in late 2024 means all tips and service charges must go to staff rather than being swallowed up by a venue’s operator. The flipside of this is that, provided a service charge is genuinely optional, operated independently, and can be removed by the customer on request, the service charge money can go directly to employees with only a 20% deduction for income tax.<br>This means staff earn far more from increased service charges than they do from increased wages.

Thirdly, the introduction of new technologies and touchscreen credit card machines made it feasible for a venue to prompt for a tip even if you’re in a fast-moving queue.<br>Essentially, at a time of ever-increasing wage demands, all these factors have combined to push the capital’s struggling hospitality trade into a mass outbreak of (entirely legal and logical) tax avoidance.<br>Service charges are a way of getting more money to staff and giving less to the government

Vicky Chiriga, 36, is the managing director of hospitality company Quiet Enjoyment. She told London Centric that one of her venues was an early mover and introduced a default 5% service charge on bar orders in 2022: “It was a way for us to generate more funds for our staff. We were really struggling at that time to afford our team, as there’d been multiple minimum wage increases. It was a way for us to stay competitive without having to increase our menu pricing directly.”<br>Traditionally, if a venue wanted to pay their staff higher wages, they simply put up their menu prices. But price-sensitive customers increasingly object to these headline price increases. There’s also the tax issue.<br>“If we increased the drinks prices by the same amount, which is what a lot of people say you should do, that would be taxed very differently by the government, and then there’d be less to give to the staff,” said Chiriga.<br>In simplified terms, putting an extra £1 on the headline price of a drink will enable an employee to receive 52 pence in their bank account. But if you put £1 on the price of a drink via a service charge then that will give an employee 80 pence in their bank account, as it removes all the deductions for VAT and national insurance charges.<br>Matt Paice, the co-owner of Michelin-starred central London restaurant Chishuru, said the shift to service charges was a sign of strain within London’s hospitality industry: “It’s a move of desperation in the face of relentless wage increases.”<br>He said staff and operators now consider ubiquitous default service charges to be a reliable alternative form of salary that sidesteps the tax system: “Labour is now by a long way the principal cost of running a food and drink venue. It used to be ingredients, not any more.”<br>Rapid increases to the minimum wage rates are pushing up salary demands across the board....