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Brief Guide to the Administration of Troncs

The long-running series of disputes between employers in the hospitality industry and HM Revenue and Customs (HMRC) concerning the taxation of employees’ tips and their National Insurance (NI) status seems to have been concluded by the issue of series of guidance leaflets on the operation of ‘troncs’.

HMRC have, in effect, accepted the industry’s contentions regarding these. The following points have been clarified:

  • no approval from HMRC is required for the appointment of a troncmaster;
  • the troncmaster can be anyone other than ‘the employer, business partner, or official of the company’ (so a manager is acceptable);
  • the business can retain discretionary service and non-cash tips without compromising the NI status of the tronc – only the sums passed to the troncmaster constitute the tronc; and
  • any amount of tronc paid in excess of tips specified in the employee’s contract of employment does not incur a NI liability.

From 1 October 2009, tips have longer been counted as part of the National Minimum Wage, regardless of how they are paid.


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The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.