How do I effectively share discretionary service charge?
The most efficient way to distribute discretionary service charge given by customers to staff is via a tronc scheme. By sharing discretionary service charge through a tronc, the need to pay NICs for both staff and businesses is removed providing significant savings for both. For example, for every £100 of service charge collected, HMRC typically take £13.80 from the employer and £12.00 from the employee, in NICs. By using a tronc scheme, both NIC costs are removed increasing employee take home and employer cashflow.
There are also many other benefits to using a tronc such as staff can get up to 100% ownership of their hard-earned tips with a say in how they are shared out, the arrangement can be genuinely independent, free from employer interference, run for the benefit of staff, and can improve staff motivation and retention as employees feel valued and rewarded.
Using an independent troncmaster, such as Buzzacott, to handle the responsibility of distributing tips through a tronc will ensure they’re not subject to NICs. 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. Get in touch today for a free consultation.