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Tronc

Increase your employees’ take-home pay at no added cost to your business with an HMRC compliant tronc scheme from WMT.

Tronc

Tronc schemes

Tronc schemes, also known as ‘troncs’ or tronc arrangements – are used by businesses in the hospitality and leisure sector to distribute service charges, tips and gratuities to their employees.

Offering significant benefits to both employers and staff through long-standing tax reliefs and exemptions, a tronc can increase employees’ take-home pay at no added cost to your business. It also makes sure that HMRC receives the right amount of tax on the ever-increasing number of discretionary payments made on a payment card.

Tronc schemes put both the business and the employee in the same tax position as cash tips – income tax is payable by the employee on the discretionary payment received, and no National Insurance Contributions (NICs) are due.

HMRC may check that your tronc arrangement fully meets the terms for exemption from NICs on payments made through the scheme. As the rules of tronc schemes are complicated and ever changing, your business could be at risk if you fail to keep up with them.

Pooling and sharing out cash tips, converting tips paid on card to cash from the till, and inadvertently creating contractual arrangements for tips are all areas of risk.

WMT designs, implements and runs tronc schemes that adhere to HMRC’s rules and guidance. Our advice is based on following ethical principles designed to protect you from tax demands and employment tribunal claims relating to the distribution of tips to staff.

How WMT can help

Our experienced team successfully defends businesses challenged by HMRC and proactively advises on employment issues, such as:

  • When it is appropriate to tax payments to employees at source
  • What conditions must be met for exemption from NIC
  • Which payments or benefits to staff count towards the National Minimum Wage or National Living Wage
  • How to incentivise and reward employees
  • Staff recruitment, retention and contractual issues
  • Employment tribunal claims involving tips or troncs
  • HMRC demands for NICs
  • Reducing your administration and legal obligations relating to the tronc

Get in touch with our hospitality team to find out more about how we can help you.

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