If you’re a caterer or manage a restaurant, pub, bar, hotel or conference venue, then your staff may benefit from receiving tips. However, that can cause challenges with HMRC, National Insurance contributions and can raise concerns about the treatment of these additional payments to workers.
There are some 150,000 businesses in the UK where tipping is common, but the practice is far from transparent. So what’s the solution? How can businesses in the hospitality, leisure and service sectors distribute tips fairly and transparently? Many employers decide to distribute gratuities by adding it to the general payroll. But there’s a drawback: the extra is often taxed as salary, meaning the staff receive it net of Income Tax and National Insurance Contributions (NICs). Enter an alternative option, one which benefits all: Troncmaster schemes.
Setting up a tronc
A tronc is a special pay arrangement used to fairly distribute tips, gratuities and voluntary service charges given by customers to staff. The word finds its roots in 1920s France where “tronc des pauvres”, or collecting boxes, were used to accept donations for the poor.
A troncmaster is an individual solely responsible for arrangements to share tips, gratuities and voluntary service charges given by customers to staff.
By assigning a troncmaster, both you and your employees stand to benefit. For example, you’ll remove the need to pay National Insurance contributions on any tips.
Although you can assign an existing employee to act as a troncmaster, it’s not a simple process so often an independant troncmaster is appointed to manage the tronc.
How it works
Benefits of a Troncmaster scheme
Remove challenges with HMRC and National Insurance
Having an independent troncmaster safeguards you from any HM Revenue & Customs (HMRC) challenge. Our independent troncs are completely transparent, conform fully with HMRC requirements, provide exemption from National Insurance Contributions and offer significant savings to employers and staff.
The reasons for having a tronc are pretty simple:
Staff can have up to 100% ownership of their hard-earned tips with a say in how they are shared out between front and back of house staff.
The arrangement can be genuinely independent, free from employer interference and influence, run for the benefit of staff.
Staff and customers can refer to formal rules that set out how the service charges are allocated and distributed.
Take better care of your employees
Staff are critical to any business, which is why our troncs are bespoke and tailored to assist our clients in their recruiting, motivating and incentivising employees.
Simplify and save money
Having a simplified process in place saves not only your staff money but also your business.
Our Troncmaster services
The Buzzacott Troncmaster team specialises in helping businesses in the hospitality, leisure and service sectors set up and manage their tronc arrangements.
Whether you’re a start-up or an established business, we can help to setup and implement your bespoke troncmaster scheme.
For more information read our Troncmaster factsheet
or contact our Troncmaster team