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Last updated: 14 Sep 2021
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Here’s how hospitality businesses can reduce the impact of rising National Insurance Contributions for staff

The recent announcement of a rise in National Insurance Contributions (NICs) won’t have helped to lift spirits in the hospitality sector. However, employers can do something to soften their staff’s potential loss of income and keep them motivated in the process.
National Insurance Contributions set to rise

National Insurance Contributions set to rise

The UK government have announced that from April 2022, employees and the self-employed who earn over £10,000 will pay more to the Exchequer in the form of a 1.25% increase in NICs. Introduced to help the NHS recover from the COVID-19 pandemic, the increase will impact hospitality businesses already financially impacted by COVID-19. Salaries for staff will be affected but so could their tips depending on how these are distributed. Hospitality staff rely on tips as an almost guaranteed form of income and the increase in NICs will have a huge impact on them.

As employers wanting to reward your hard-working employees and fairly share out tips, by having a tronc, you can reduce the impact of the NICs rise and potentially save your staff money.

About the author

Samantha McCarthy

+44 (0)20 7556 1227
newtons@buzzacott.co.uk
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National Insurance Contributions set to rise

The UK government have announced that from April 2022, employees and the self-employed who earn over £10,000 will pay more to the Exchequer in the form of a 1.25% increase in NICs. Introduced to help the NHS recover from the COVID-19 pandemic, the increase will impact hospitality businesses already financially impacted by COVID-19. Salaries for staff will be affected but so could their tips depending on how these are distributed. Hospitality staff rely on tips as an almost guaranteed form of income and the increase in NICs will have a huge impact on them.

As employers wanting to reward your hard-working employees and fairly share out tips, by having a tronc, you can reduce the impact of the NICs rise and potentially save your staff money.

How a tronc can help

How a tronc can help

If you pass tips, gratuities and service charges (tips) onto your staff by adding them to the general payroll, from April 2022 your staff will take home less because of the increased NICs of 1.25%. With this in mind, now’s the time to consider implementing a tronc.

By distributing tips via a tronc, the need to pay NICs (employees NICs for staff and employers NICs for the business) is removed providing significant savings for both. This means that regardless of whether the NIC rate is to be increased, using a tronc managed by an independent troncmaster, such as Buzzacott, will ensure your employees hard-earned tips are received exempt from NICs. The image below shows how a tronc can increase what your employees take home.

Troncbeforeandafter

How we can help

How we can help

Whether you’re a new or an established business, we can help you set up and implement your bespoke tronc scheme quickly, within four weeks of your initial engagement. 

By appointing us as your independent troncmaster you’ll benefit from our experience of supporting a wide range of businesses in the hospitality sector, from bars and restaurants to hotels and casinos. Our troncs are completely transparent, conform fully to HMRC requirements, provide an exemption from NICs and offer significant savings to employers and staff. Get in touch today for a free consultation.

Get in touch

Call us today on +44 (0)20 7710 3389 or email buzzacotttroncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.

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