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Tronc scheme design and setup for UK hospitality
Design and set up a tronc scheme with an independent troncmaster, written allocation rules and the records the Employment (Allocation of Tips) Act 2023 requires. Employer NIC relief applies only to qualifying voluntary tips.
Tronc scheme design is the work of deciding, in writing, how tips and discretionary service charge reach your staff, who decides the split, and how it runs through payroll. We set the scheme up with you and appoint an independent troncmaster, so the arrangement is built to meet the conditions HMRC sets out in E24 rather than adapted after a problem appears.
Most operators come to us at one of three points: opening a new venue, moving from cash-in-a-jar to card tips at scale, or discovering that their current "tronc" is really the general manager dividing a spreadsheet. Each needs a different starting point, and we will tell you plainly if a tronc is not the right answer for you.
What we settle before anything is written
- The legal employer. Which company employs the staff, and whether one scheme can cover several entities or each needs its own. Groups with an operating company per site often need more than one arrangement.
- Where the money comes from. Card tips, cash tips, tipping apps and service charge are separated at source. A service charge the customer must pay is not a tip: under HMRC E24 it attracts National Insurance however it is shared, so it is kept out of any NIC calculation.
- Who the troncmaster is. The person or firm deciding the allocation must do so free of direction from the employer. An owner, director or site manager in that role usually defeats the purpose.
- Who is in the pool. Front and back of house, agency staff, salaried managers and leavers. Each choice affects fairness under the Code of Practice and how easy the scheme is to explain.
What the scheme includes
- A written tronc constitution: the troncmaster's role, independence, appointment and replacement
- Allocation rules (points, hours, roles or a mix), with worked examples staff can follow
- The written tipping policy the Employment (Allocation of Tips) Act 2023 requires you to make available to workers
- A staff announcement and a short FAQ for managers, so the change does not land as rumour
- Contract wording checks, so tronc payments are not promised as part of pay
- A payroll interface: the file layout, cut-off dates and who signs off each period
- A record-keeping routine covering tips received, allocation and payment
Tronc PAYE and payroll
Tronc payments are taxable earnings. Income tax under PAYE is always due; only employer and employee National Insurance can fall away, and only on qualifying voluntary tips and discretionary service charge allocated independently. In practice the troncmaster usually operates a separate tronc PAYE scheme registered with HMRC, or your payroll runs the tronc on the troncmaster's figures. Either works if the allocation decision stays with the troncmaster. We help you choose based on your payroll provider, how many entities you have and who will process each run.
Monthly, fortnightly or weekly?
Most venues distribute monthly alongside payroll because it is simplest to reconcile. Weekly or fortnightly cycles suit high-turnover teams who expect tips quickly, at the cost of more processing. Whatever you choose, the Code of Practice expects tips to be paid no later than the end of the month after the month they were received, so the cycle is designed around that deadline.
Records you will keep
The Tips Act requires records of tips received and how they were allocated to be kept for three years, and workers can ask to see information about their share. We set up the records so that request takes minutes, not a week of digging through till reports, and so the same evidence supports the scheme if HMRC asks how it runs.
Realistic timeline
A single venue with clean till data and a willing payroll provider is often ready for a first distribution within four to six weeks. Groups, multiple employing entities, a new tronc PAYE registration or a payroll provider that needs a new import format take longer. We give you a dated plan after the scoping call rather than a promise up front.
What affects the fee
We quote after a short scoping call. The main drivers are the number of venues, the number of staff in the pool, how many employing entities are involved, your distribution frequency, and whether we integrate with an existing payroll or run tronc PAYE ourselves. Setup is quoted separately from any ongoing monthly tronc management.
What a tronc will not do
- It does not remove income tax from tips.
- It does not create NIC relief on a mandatory service charge.
- It does not work backwards: relief applies to distributions made once the scheme genuinely operates.
- It does not stay compliant on its own. If the employer starts directing the split, the conditions fail.
Want to see the numbers first? Run the free tronc health check, or request a scoping call for a quote. Already running a scheme? An independent tronc audit may be the better first step.
Official guidance we work from
- HMRC E24: tips, gratuities, service charges and troncs
- Distributing tips fairly: statutory Code of Practice
- GOV.UK: employee gets tips through a tronc
This page is general information, not tax or legal advice for your business. Outcomes depend on how your arrangement actually runs.
What happens when you start
Step 1: discovery
We review your current tip and service charge flows, payroll setup, contracts and any existing tronc rules, and confirm what is at risk under HMRC E24 and the Employment (Allocation of Tips) Act 2023.
Step 2: scheme design
We draft the allocation rules with your team, write the tronc constitution, and estimate the employer NIC that could fall away on the qualifying voluntary part of your last three months of tips.
Step 3: launch
The troncmaster is appointed independently of the employer, tronc PAYE is set up or mapped to your payroll, staff receive the written policy, and the first distribution runs. Timing depends on entities and payroll.
Who this is not for
Tronc Scheme Design & Setup only works when these conditions hold. We would rather say so now.
- Businesses that do not take card tips or service charge — there is nothing for a tronc to distribute.
- Employers who want to keep control of who gets what: an independent troncmaster must allocate free of employer direction, or the NIC exemption fails.
- Anyone expecting NIC relief on a mandatory service charge. Under HMRC E24, a mandatory charge paid to staff attracts NIC however it is shared.
- Sites that want tips paid outside PAYE entirely — every tronc payment is still taxable under PAYE.
Card tips, discretionary service charge and multi-site groups are all in scope.
Frequently Asked Questions
Related tronc services
Get in touch
Talk to a Tronc Expert
Free 30-minute call to review your tips, service charges and HMRC exposure — with specific advice on Tronc Scheme Design & Setup.
- +44 207 183 3436
- info@troncmasterservices.co.uk
- United Kingdom · Serving all UK hospitality