COVID-19 Business Support Hub
Make an Enquiry

Make an Enquiry

Please complete the form below, a member team will be in touch with you in the next 24 hours.
Fields marked with a * are required

  • This field is for validation purposes and should be left unchanged.

What is the tronc system?

Share post

  • Share on Linkedin
  • Share on Twitter
  • Share on Facebook

Mercer & Hole Audit and Business Advisory Partner Andy Turner has significant experience of advising the hotel and hospitality industry. One of his regular talking points with clients is how to help them manage the fair distribution of tips, gratuities and service charges whilst considering the tax considerations and liabilities, which accompany such payments. Here, Andy provides an insight to the tronc system, a potential solution to the tips challenge.

What does tronc mean?

The word ‘tronc’ is believed to be from the French words ‘tronc des pauvres’ meaning poor box. Having developed from the old boxes left in churches to collect money for the poor, a tronc is now a term for a special pay arrangement used to distribute tips, gratuities and service charges, as well as a sophisticated way of saving National Insurance Contributions (NICs) in the hotel and hospitality industry.

How can a tronc help?

Tips, gratuities and service charges paid via a tronc may mean that they are exempt from National Insurance contributions (NICs). Legislation states that any amount paid to an employee which is “the payment of a gratuity” or “in respect of a gratuity” is exempt from NIC’s if:

  • It is not paid directly or indirectly to the employee by the employer and does not comprise or represent monies previously paid to an employer;
  • It is not allocated directly or indirectly to the employee by the employer.

In most cases if a business passes a tip to an employee the business is responsible for NICs because neither of the above two conditions are met. This is where a tronc becomes useful.

How does a tronc work?

  • The tronc is a means of collecting the tips from the customers. The tronc effectively holds the tips from the customer in a common fund.
  • Usually a troncmaster will be appointed (this could typically be the Head Waiter) and they will be responsible for collecting the tips (the tronc) and distributing the tips.
  • This has the benefit of fulfilling the above 2 conditions and meaning the payment can be made without deduction of NICs.

Income tax is still payable on the income received by the waiting staff and under certain circumstances the troncmaster may also be required to operate a PAYE scheme and deduct income tax before making the payment. The tronc must be registered with HMRC.

What are the benefits of a tronc to my business?

As well as the potential exemption from NICs outlined above, a tronc is a fair and transparent way of managing tips, gratuities and service charges.

In addition to those on the balance sheet, there are also more emotive benefits, which have the potential to add to the success of your business:

  • A tronc supports hotel and hospitality staff receiving the tips they have worked for and therefore they will feel valued. This increases staff retention, promotes high service levels and enhances reputation.


  • A tronc can help your business comply with HMRC’s rules.

If you would like to discuss whether a tronc could be of benefit to your business, please get in touch with Andy Turner or your usual Mercer & Hole partner.

Troncmaster on Tronc tips and payments

Share post

  • Share on Linkedin
  • Share on Twitter
  • Share on Facebook
Contact us >