A method used to distribute tips, service and gratuity amongst employees. When tips are pooled and shared by staff, the person who controls the tronc has to set and run payroll. HMRC needs to know who this person, so they can set up a PAYE scheme.
Troncs are a means of collecting tips from customers, the tronc will hold the money in a pool. The person in charge will collect and distribute the tips, they have to set up a PAYE scheme to deduct income tax. Note: Employees might not have to pay NI contributions.
The main reason for using troncs is because it’s fair and transparent. They are also occasionally exempt from NI contributions so the staff will usually get the full tip amount.
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