If you run a hospitality business — a restaurant, bar, hotel, or café — and your staff receive tips, service charges, or gratuities, you need to understand TRONC. Getting it right can save your business thousands of pounds per year in employer National Insurance contributions. Getting it wrong can lead to unexpected HMRC tax bills and penalties.
What Does “TRONC” Mean?
The word TRONC comes from the French phrase “tronc des pauvres” — literally, “the poor box” — a collection box historically used in French churches. In modern hospitality, a TRONC is a formal arrangement for pooling and distributing tips, gratuities, and service charges to employees.
A TRONC is not just an informal tip jar. It’s a recognised structure under UK tax law with specific rules about who controls it, how it’s distributed, and how it’s reported to HMRC.
How Does a TRONC Scheme Work?
A TRONC scheme works like this:
- 1Tips are collected — from card payments, cash, or service charges added to bills.
- 2Tips enter the TRONC pool — a ring-fenced fund managed independently of the employer.
- 3A TroncMaster distributes the pool — according to pre-agreed rules (points, hours, role-based, or hybrid).
- 4Employees receive their share — typically via payroll, with income tax deducted but without employer NI.
Why Does Your Venue Need a TRONC?
There are three compelling reasons every hospitality business should consider a TRONC scheme:
1. Significant Employer NI Savings
When tips are distributed through a properly structured TRONC with an independent TroncMaster, they are exempt from employer National Insurance contributions (13.8%). For a venue with 50 staff each receiving £200/month in tips, that’s a saving of approximately £16,560 per year.
2. Fair, Transparent Tip Distribution
A TRONC scheme with clear rules removes suspicion and disputes. Employees can see exactly how their share is calculated — whether it’s based on hours worked, job role, seniority points, or a combination. Transparency builds trust and reduces staff turnover.
3. HMRC Compliance
Without a TRONC, the employer is responsible for tips — meaning they must pay employer NI on them and manage the tax reporting. A properly structured TRONC shifts the tax reporting responsibility to the TroncMaster and eliminates the NI liability entirely.
Key Requirements for a Valid TRONC
- An independent TroncMaster who is not the employer or acting on the employer's behalf
- Clear, documented distribution rules agreed upon in advance
- Complete records of all tips received and distributions made
- The employer must not influence or control how tips are distributed
- Employees must be informed about how the scheme works
- Income tax must still be deducted via a separate TRONC PAYE scheme
Common Mistake
If the employer controls or influences how tips are allocated — even informally — HMRC can rule that the TRONC is not independent. This means all distributions become subject to employer NI, and back-payments may be demanded. This is why using a system like Rocket Tronc with built-in independence controls is so important.
TRONC vs. Employer-Managed Tips
| TRONC Scheme | Employer-Managed | |
|---|---|---|
| Employer NI | Exempt (0%) | 13.8% payable |
| Employee NI | Exempt | Payable |
| Income Tax | Payable (via TRONC PAYE) | Payable (via main PAYE) |
| Who Controls Distribution | Independent TroncMaster | Employer |
| HMRC Reporting | TroncMaster (separate PAYE) | Employer (main PAYE) |
How Rocket Tronc Makes This Easy
Setting up and running a TRONC scheme manually is complex, error-prone, and time-consuming. Rocket Tronc automates the entire process:
- Automatic rule-based distributions — points, hours, role-weight, or hybrid
- Built-in TroncMaster independence controls
- Full audit trail with timestamped records for every distribution
- Real-time compliance dashboard with warnings
- One-click payroll exports with TRONC amounts separated
- Multi-venue support with per-venue rules