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enquiries@buzzacott.co.uk    T +44 (0)20 7556 1200

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Read time: 6 minutes
Last updated: 29 Mar 2021
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Why you should review your tipping practices before reopening

As restrictions are slowly lifted, many businesses in the hospitality sector will be preparing for the dates when they can reopen their doors to the public. As part of this preparation, Samantha Newton reveals why now is the ideal time to review your current tipping practices.
Why review your tipping practices?

As lockdown restrictions continue to be lifted throughout Spring, a full return to normality is anticipated by summer. Many businesses are growing in optimism about their longer-term prospects and are planning to use the next few months to prepare for their reopening. One aspect that should not be overlooked is tipping arrangements.

Why review your tipping practices?

Even in normal times, your tipping practices should be regularly reviewed and updated to ensure they’re efficient. Practices that are dated may lend themselves to unnecessary tax or National Insurance Contributions (NICs) at a cost to staff or you, the employer. If they are outdated, they most certainly will not be the fairest or the most transparent way of distributing tips among your employees.

Over the last year, a regular review of your tipping practices has possibly dropped down the list of your priorities. However, with businesses quiet or even at a standstill, we would advise making the most of this time to conduct a review while you’re without distraction and updates can be implemented quicker than usual.

One of the simplest options to bring your tipping arrangements up to date, and seamlessly retain more cash by removing the need to pay NICs, is a tronc.

About the author

Samantha Newton

+44 (0)20 7556 1227
newtons@buzzacott.co.uk
LinkedIn

As lockdown restrictions continue to be lifted throughout Spring, a full return to normality is anticipated by summer. Many businesses are growing in optimism about their longer-term prospects and are planning to use the next few months to prepare for their reopening. One aspect that should not be overlooked is tipping arrangements.

Why review your tipping practices?

Even in normal times, your tipping practices should be regularly reviewed and updated to ensure they’re efficient. Practices that are dated may lend themselves to unnecessary tax or National Insurance Contributions (NICs) at a cost to staff or you, the employer. If they are outdated, they most certainly will not be the fairest or the most transparent way of distributing tips among your employees.

Over the last year, a regular review of your tipping practices has possibly dropped down the list of your priorities. However, with businesses quiet or even at a standstill, we would advise making the most of this time to conduct a review while you’re without distraction and updates can be implemented quicker than usual.

One of the simplest options to bring your tipping arrangements up to date, and seamlessly retain more cash by removing the need to pay NICs, is a tronc.

What is a tronc scheme?

What is a tronc scheme?

A tronc, also known as a tronc scheme or tronc system, is a special payment arrangement that lets businesses fairly distribute staff tips, gratuities, and service charges given by customers. The benefits of implementing a tronc scheme include:

  • They offer significant savings to staff and businesses through exempt NICs
  • Staff can get up to 100% ownership of their hard-earned tips with a say in how they’re shared out
  • The arrangement can be genuinely independent, free from employer interference, run for the benefit of staff 
  • They can improve staff motivation and retention as employees feel valued and rewarded
How does a tronc scheme work?

How does a tronc scheme work?

Many employers decide to distribute gratuities by adding them to the general payroll. But, there’s a drawback: distributing gratuities in this way results in the extra being taxed as salary, meaning staff receive it net of income tax and NICs. Discretionary payments of tips allocated through a tronc scheme, where all qualifying conditions are met, are exempt from employers and employees making NICs. Given that employer and employee NICs total over 25%, this represents significant savings. Put simply, a tronc leaves everyone better off.

How we can help

How we can help

Get in touch for assistance with updating your tipping system. We can review your existing tipping practices and highlight the cost savings available to both you and your staff if you run a tronc.

If you wish to implement a tronc, Buzzacott can manage the process and act as your independent troncmaster. As your appointed troncmaster, we’ll ensure you and your staff receive all the benefits mentioned earlier as well as provide the assurance that:

  • The tronc is not influenced by employers, nor by bias or favouritism, and represents what’s in the best interest of all employees
  • The distribution and pooling of tips is completely transparent for staff and you
  • The tronc remains in line with the latest HMRC policy changes ensuring you’re safeguarded from any HMRC challenge
  • Staff are relieved of the administrative burden of running the tronc and can focus solely on their daily tasks

Whether you’re a new or an established business, we can help you set up and implement your bespoke tronc scheme.

Get in touch
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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