What is a tronc scheme?
A tronc scheme is a special pay arrangement that lets business who take tips, gratuities and service charges from customers, distribute these to staff in a fair and cost effective way.
Why does there need to be Troncmaster?
A tronc scheme is administered by a Troncmaster so it is mandatory in order to run the scheme.
Who can be a Troncmaster?
A Troncmaster must be someone who is independent of the business owners or senior/hiring team. This is one of the most common areas where businesses get it wrong, as they may appoint a senior team member or HR person as Troncmaster, but if they have any hiring responsibilities this will make the tronc scheme non-compliant and open to HMRC penalties
How much is saved through a tronc scheme?
As tips distributed through a tronc scheme, attract no National insurance, the business saves 13.8% on Employers’ NI and the employees save 12% Employees’ NI.
Do I need a separate PAYE scheme for the tronc?
Tronc allocated by an independent Troncmaster can be processed via the Employer’s PAYE scheme, however a separate scheme would be necessary if the tronc funds are paid from a separate bank account. This can cause confusion for employees however, so we usually recommend using the one PAYE
What type of tips can be included in a tronc scheme?
Tips must be pooled tips, not direct tips to individuals, and must be discretionary for the customer. So service charges added to the bill can be included, but only if the customer has the option of removing.
Do I have to have a tronc scheme to distribute tips?
You don’t have to use a tronc scheme, and if you don’t pool your tips but they are given directly to individuals, then a tronc scheme isn’t necessary. But without a tronc scheme, tips will be subject to National insurance for the employee and if they go through the businesses’ bank account, then NI for the employer too.
Why would I use an independent Troncmaster?
With so many challenges facing hospitality businesses and their staff, having the responsibilities of running a tronc scheme can become overwhelming for a staff member. Not only do they need to decide on fair tips distribution model, they will have to calculate the amends every pay period and keep meticulous records. If that member of staff leaves or no longer wishes to take on the role, you will need to find an alternative pronto.
With an independent Troncmaster, they have a tea, of people, plus the tech to carry out the tronc administration. And, because it is what they do every day, they are knowledgeable and efficient.