TIPS, SERVICE CHARGES AND
TRONC
With tipping practices back in the spotlight,
dealing with cash tips, service charges and Tronc
has become a real concern for many restaurant
and hospitality operators.
WHAT IS A TRONC?
A tronc – also refered to as troncs or tronc arrangements – is a special tax-efficient
pay arrangement used to distribute tips and service charges to employees and a
cost effective method motivation, incentivisation and reward. Usually administered by
an independent Troncmaster (who must not be a director or owner), he or she
decides how the money is distributed to employees.
TAX ON TRONC
Employees who receive service charge via a tronc are liable to pay income tax but
benefit from a 12% Employees National Insurance saving. Employers also benefit
from a 13.8% Employers National Insurance saving.
2019 QUEEN’S SPEECH
The Queen has announced, on 14th October 2019, that the government “will take
steps to make work fairer, introducing measured that will support those working
hard”. The new Employment (Allocation of Tips) Bill will ensure that 100% of all tips,
service charges and gratuities will be handed to over to waiting staff. Read More.
TRONC ADVICE AND TRONCMASTER SERVICES
As well as providing routine restaurant accountancy services, our specialist payroll
and Tronc team can advise on:-
- Cash Tips, Service Charges and Tronc
Correctly pooling cash tips
Implementing and distributing service charge
Setting up a points based distribution
Tronc healthcheck
Troncmaster services
Fair distribution arrangements
Safeguard against HMRC inspections
Reducing administration and payroll obligations relating to Tronc
Tronc and National Minimum Wage
TRONC HEALTH CHECK
We provide a free, no obligation health check on your current tips, TRONC and
service charge arrangements. The health check identifies areas that may leave your
current TRONC arrangements invalid and areas that can be improved or
streamlined.