TRONCS

TRONCS, Tips, Gratuities and Service Charges

We can help Employers and Troncmasters working in the Catering and Service Industries on how to treat Tips, Gratuities and Service Charges for Income Tax, National Insurance Contributions, National Minimum Wage and VAT purposes

HM Revenue & Customs now accept that unless a business has involvement (directly or indirectly) in the allocation of tronc monies, that is deciding to pay a specific amount to a specific person, no National Insurance Contributions will be payable by either the employer or the employees on money distributed via a tronc arrangement. 

Where a business has accounted tips amounts paid by troncmasters towards the National Minimum Wage entitlement, there will no longer be any liability to National Insurance Contributions, resulting in a significant combined amount of National Insurance Contributions saving of currently 23.8%.

Additionally, where an employee’s contract of employment gave an entitlement to share in the tronc, without specifying the amount of tronc to be paid, those tronc payments will now also be free of National Insurance Contributions.

Businesses and Troncmasters should  now urgently review their tronc arrangements in order to make sure that they are paying no more National Insurance Contributions than is absolutely necessary.