What are the benefits of a tronc scheme?

Most hospitality businesses who operate a tronc do so because it gives both the business and the employee significant tax savings. Operated correctly, it saves National Insurance payments for both sides (ee’s and er’s).

tronc overview

A tronc is managed and controlled by an individual called the ‘troncmaster’

This individual must have independence from the decision making of the business. Often they are an employee, such as the Restaurant Manager, but they cannot be the business owner or Director.

It can also be someone external to the business, which is the service we provide at Troncmasters. Having an independent third party act as the troncmaster ensures absolute independence and also has greater experience in setting up and administering tronc schemes.

What is included in a tronc scheme?

A tronc scheme can only distribute the proceeds of discretionary tips, gratuities and service charges. This will usually include all tips made on cards and service charges added to the bill. It also includes cash tips if these tips are pooled rather than kept by the individual.

tronc overview

It is up to the business to decide what proportion of the service charges paid by customers are included in the tronc but, increasing pressure from the government and the recent Queens’ speech it is looking like new legislation is on the horizon that will result in 100% of discretionary tips having to go to staff.

Businesses will often retain a small percentage of the card gratuities in order to cover the costs associated with the payment processing, although this practice may have to change if the new legislation comes into play.

tronc overview

Choosing the right tronc structure

The way your tronc is structured depends on many variables and can be complex and seem to be ever-changing. Getting the right advice from the outset is crucial or your business could be at risk of getting it wrong.

  • Who will be the Troncmaster and Deputy Troncmaster?
  • Who decides on the allocation rules?
  • Which members of staff will be included as members of the tronc?
  • Who will hold the pooled funds?
  • How will payments be made – as part of existing PAYE or as a new PAYE?

Troncmasters not only provide consultancy advice that will support you to set up your tronc, we can also act as the troncmaster, ensuring independence in the allocation of tips, and can even make payments for you with our Tronc Complete service.

Our Tronc Services

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