The usual disclosure: we make Seamless, a hospitality EPOS, and we're not accountants. This is the framework we talk through when customers ask. The final call belongs with your accountant or a tronc specialist.
Every guide to tronc schemes tells you about the National Insurance saving. Almost none tell you when a tronc isn't worth having. Here's the honest version of both.
The one-number test
Add up a year of card tips and service charge going through your business. At 2026/27 rates, a compliant tronc keeps roughly £230 of every £1,000 away from National Insurance: £150 for the business and £80 for the team.
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Under ~£10,000 of tips a year: the saving is under ~£2,300, and setup plus running costs (a separate PAYE scheme, allocation admin, possibly a paid troncmaster service) can eat most of it. A tidy tips policy through normal payroll may honestly serve you better.
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£10,000–£40,000: the sensible middle. A staff troncmaster with your existing accountant running the mechanics usually captures the saving without much overhead.
- £40,000+: you are leaving five figures on the table without one. At £120,000 of tips, the combined NIC removed is around £27,600 a year.
Counter-service café where tipping is a coin cup? Probably skip it. Wet-led pub with service charge on food, or any table-service restaurant? Run the number. It's rarely close.
What you must do even without a tronc
The Employment (Allocation of Tips) Act 2023 applies to every venue regardless: 100% of tips to staff, fair and transparent allocation under the statutory Code of Practice, a written policy, records staff can request, payment by the end of the following month. A tronc doesn't create these duties and skipping a tronc doesn't remove them. The tronc is purely the tax-efficient vehicle for doing what the law already requires.
The three ways venues get this wrong
1. The fake tronc. The owner "suggests" the allocation each month and the troncmaster rubber-stamps it. If HMRC concludes the employer controls allocation, the NIC exemption vanishes, retrospectively, with the bill to match. Independence is the whole game.
2. The shoebox tronc. Allocation happens, but from memory and paper. The Act gives staff the right to see the tipping record and a tribunal route if it looks unfair. If your till isn't recording tips per transaction and per staff member, you can't evidence fairness. (This is the part your EPOS should be doing for you. Seamless logs terminal tips automatically against staff and shift, and any decent system should give you the same. If yours can't, that's a till problem rather than a tronc problem.)
3. The forgotten policy. The scheme runs fine but nothing is written down. The Code of Practice expects a written tips policy available to staff; it's an afternoon's work and it's the first thing anyone asks for in a dispute.
If the number says yes
The order of operations most venues follow: agree the allocation principles with the team → appoint a troncmaster (senior staff member for single sites; specialist provider if you'd rather outsource the liability) → troncmaster registers the separate PAYE scheme with HMRC → write the tips policy → make sure the till is capturing tips per staff member so the monthly run is an export, not a reconstruction. From decision to first compliant distribution is typically a month.
Frequently asked questions
Can the owner or a director be the troncmaster?
It undermines the independence test the NIC exemption relies on. Keep the employer out of allocation entirely.
Can we backdate a tronc to reclaim past NIC?
No. The exemption applies from when a compliant tronc operates. Every month without one is saving forgone.
Does the troncmaster get paid?
Staff troncmasters sometimes receive a small allowance (taxable as normal); external providers charge setup and monthly fees, so weigh those against the saving in the one-number test.
What happens if a troncmaster leaves?
Appoint a successor and update HMRC. The scheme continues; the independence requirement transfers to the new person.
Sources: HMRC E24; Employment (Allocation of Tips) Act 2023 and Code of Practice; 2026/27 NIC rates. Illustrations, not advice.
