What is a tronc? How UK venues share tips under the Allocation of Tips Act

A tronc is an arrangement for pooling tips, gratuities and service charges and sharing them among staff, run by a troncmaster who is someone other than the employer. In UK hospitality a tronc has two practical effects. Tips and voluntary service charges paid out through it are free of National Insurance contributions when the employer has no say in how the money is allocated. And since 1 October 2024, the Employment (Allocation of Tips) Act 2023 has treated an employer that fairly uses an independent tronc as meeting its legal duty to allocate tips fairly.

Income tax is still due on tronc payments, and the employer keeps its duties around the written tipping policy and records. A tronc changes who makes the allocation decisions, and the business still answers for how the scheme is set up and run.

How does a tronc work?

Card tips, voluntary service charges and any cash tips staff choose to pool go into the tronc. The troncmaster decides who receives a share and how much, for example with points based on role or hours worked, and the payments reach staff through payroll. HMRC's E24 guidance says that where a troncmaster controls and shares out the money, the employer must tell HMRC (unless the arrangement started before 6 April 2004), and a PAYE scheme must be set up in the troncmaster's name unless different PAYE arrangements are needed.

The troncmaster is personally responsible for operating that PAYE scheme. They can use the employer's payroll software to run it, but the tronc's PAYE records must be kept separate from the employer's. If the employer, a business partner or a company director acts as troncmaster, HMRC treats them as making the payments as the employer, and the payments go through the employer's payroll.

Are tronc payments free of National Insurance?

They can be. A tip is disregarded for Class 1 National Insurance if either of two conditions is met: the employer did not pay it, directly or indirectly, and it does not represent money previously paid to the employer; or the employer does not allocate it, directly or indirectly, to the employee. Card tips and voluntary service charges are usually paid to the business first, so a tronc relies on the second condition, and the troncmaster has to make the allocation decisions independently.

HMRC reads allocation as deciding both who benefits and by how much. Its manual gives the example of an employer that decides which staff can join an independently run tronc but has no say over the amounts, and no National Insurance is due in that case. If a manager or owner sets each person's share, the employer operates PAYE and National Insurance is due.

Mandatory service charges are treated differently. E24 says National Insurance is always due when a compulsory service charge is paid out to employees, regardless of how it is shared, so routing one through a tronc does not change the position. Income tax applies to every tronc payment, and tips do not count towards National Minimum Wage pay.

How does the Allocation of Tips Act affect troncs?

The Act requires employers to make sure all qualifying tips, gratuities and service charges at a place of business are allocated fairly among the workers there and paid by the end of the month after the customer paid. Section 27F covers independent troncs. If an employer arranges for an independent tronc operator to allocate the tips, and it is fair to make that arrangement, the employer is treated as having met the fair allocation duty. The operator must be someone the employer reasonably considers independent, and the arrangements must not make unauthorised deductions.

The statutory code of practice adds that an employer who learns a tronc is being run unfairly must act, and that the employer remains liable for fairness. The written policy and record duties stay with the employer too. Records must show the amounts allocated through an independent tronc and be kept for three years, and a worker who asks for them must receive them within four weeks, so agree with your troncmaster who holds which records.

The same rules decide what happens to a restaurant's service charge, and our guide to service charge in UK restaurants covers what customers can refuse and how a compulsory charge has to be priced.

Who should be the troncmaster?

The code describes several options: a member of staff appointed as an independent operator, an external payroll or accountancy firm, or a worker elected by colleagues. Whoever takes the role needs to decide allocations without direction from management, keep accurate records and run a PAYE scheme on time.

If you appoint a member of staff, plan cover for their holidays and decide how a dispute about their own share would be handled. An external provider can apply the same rules across several sites, at a cost. Write the appointment down, including how a troncmaster is replaced, because independence is easier to show when the process is on paper.

What should a tronc policy cover?

The written policy the Act requires and the tronc's own rules can sit in one document. It should set out:

• Which money goes into the tronc, such as card tips, voluntary service charge and pooled cash tips, and how any compulsory service charge is handled.
• Whether the business requires or encourages customers to tip or pay a service charge, which the Act says the policy must state.
• Who takes part and how shares are worked out, for example points by role, hours worked or length of service.
• Who the troncmaster is, how they are appointed or replaced, and how their independence is protected.
• When staff are paid, which must be no later than the end of the month after the customer paid.
• How staff can read the policy, request their records and raise a concern.
• When the policy will next be reviewed.

Section 14 of the Employment Rights Act 2025 will add a duty to consult a recognised trade union, workers' representatives or the workers themselves before producing a tipping policy, and to review it at least every three years. It is not yet in force. The government is consulting on a revised code of practice until 29 September 2026 and expects the new requirements and the updated code to take effect in late 2026, subject to Parliament approving the code. Consulting staff on a tronc policy now will make that change easier when it starts.

Tiquo can ask guests to add a tip on the card reader, and its end-of-day sales export shows tips and service charges for each trading day. A troncmaster can work from those totals, while the points, shares and payouts stay with them and with payroll.

This is general information. Read HMRC's E24 guidance and the statutory code of practice, and speak to HMRC or a payroll adviser before setting up or changing a tronc.