What can I do with my end of season tips?

Many yacht crew are lucky enough to end the season with some healthy tips… in cash! Is there anything that can be done with these to prevent you having to walk around with a bundle of notes or stowing it under your mattress?

Bank it or invest it? Due to strict anti money laundering (AML) legislation the investment or saving of cash is now very difficult to administrate. You have now to prove where you got the cash from (a letter from your captain may suffice) but many banks are now reluctant to accept a large deposit in this manner.
Most crew bank with offshore centres and so simply can’t walk into their local branch, though it may be possible to get a bankers draft from another bank (at a cost) and send this to the offshore bank by post. Also the receipt of cash as payment could be seen by authorities as tax evasion which is a serious offence and so thought must be given to deciding whether to receive any payment in cash at all. In addition, having cash has other downsides, such as not being able to take advantage of the plethora of online discounts for goods and services, where you would pay with a card, or having the benefit of additional card services for your purchases, such as insurance.

So what are the alternatives?

Get paid tips as a salary top up – more and more yachts are now receiving the tips for charters as part of the account when the charter is booked. This means that after the charter the guests can give permission for these funds to be released to the crew which can then be paid directly into the bank account and declared accordingly. If the captain does receive cash as a tip from a charter, many now keep this as part of the yacht running cash requirement and then distribute the tips to the crew from the yacht bank account – this a very sensible way to manage the accounts and it is strongly believed that they will become the normal practice over time. Chat to the captain or purser if you want to go down this route… also ask at the interview stage as to the normal treatment of tips.

Spend it – on balance it is probably best to not ever receive cash in the first place, if this can be arranged with the yacht. If it is unavoidable then consider spending the cash at the end of the season and get into the habit of saving or investing more of your salary during the busy charter season. Many investment accounts will accept relatively small lump sums on an ad hoc basis when funds have built up in your bank account.

Remember, if you are tax resident in any country your tips MUST be declared as part of your income, whether you receive them as cash or via a bank transfer.