If you are in the hospitality sector, having an effective tronc scheme in place is fair to all and could save you money
Tips, gratuities and service charges are an integral part of the hospitality sector, with many employees relying on tips as part of their income. The UK restaurant and café industry was worth £87.96 billion in 2017 with tips representing around £11 billion!
Recent high profile cases with national restaurant chains where employees have not received their due tips, or are charged admin fees by employers, has brought this issue to the fore. The government has put a spotlight on ensuring tips are distributed fairly to employees, with legislation to this effect being introduced at the earliest opportunity.
The Department for Business, Energy & Industrial Strategy said: “While most employers act in good faith, in some sectors evidence points towards poor tipping practices, including excessive deductions being made from tips left by customers.”
View our dedicated tronc services website to see how tronc services and schemes can help your hospitality business.
A tronc is a special arrangement with HMRC where the employer does not control the allocation of tips. The cost of getting it wrong when handling tips, gratuities and service charges are outlined in this blog.
This is decided by an appointed troncmaster who is responsible for collecting, distributing and accounting for PAYE on tips.
Tronc schemes offer significant benefits to both employers and employees and a correctly set up and managed scheme will address many of the potential risk areas such as the pooling and sharing out of cash tips, tips paid on cards and paying of tips through the salary payroll.
Our experienced team of tax and payroll specialists can assess your organisation’s current situation and advise on the tax implications of your tips handling and where improvements could be made.
If you decide to set up a tronc scheme we can advise and set up the scheme for you, ensuring it is fully HMRC compliant. This includes:
For our payroll clients, we can also act as your troncmaster, managing your tronc scheme and operating your tronc payroll. This could be taking over an existing tronc scheme you have in place, or setting you up a new scheme.