E-BOOK
Tips, Tronc and the 2024 Rules
Eight chapters on the Employment (Allocation of Tips) Act: what changed on 1 October 2024, what it left alone, and the National Insurance a properly independent tronc keeps for the business and the team. One worked tronc runs through it, £1,880 a week across twelve people, the same numbers as the calculator and the records workbook.
- Eight chapters, one worked tronc, the records sheet the law expects
- The four requirements, each checkable by your own staff
- The £22,485 the demo tronc keeps out of National Insurance
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Who this e-book is for
Venue owners who pass tips on and want the saving done properly, troncmasters who inherited a spreadsheet, and anyone whose service charge wording was written by the menu designer.
You pass tips on but employer-allocate them
Then both National Insurances are being paid on money that could legally escape both. Chapter five works the demo book: £97,760 of tips a year costs £14,664 of employer NIC and takes £7,821 out of the team’s pockets when the employer allocates, and none of it through a genuinely independent tronc, about £652 more per person. The condition carrying all that weight is independence, and the book is precise about what collapses it.
You are not sure your setup is legal since October 2024
The four requirements are each checkable by your own staff, which is the point of chapter one: one hundred per cent of tips reach workers, by the end of the month after the month paid, under a written policy, with records workers can request. The enforcement route is the tribunal, and since the records are requestable, the practical auditor is any member of staff with a phone.
Your menu says “a discretionary service charge will be added”
That sentence is doing more tax work than it looks. A genuinely discretionary charge, one the customer can strike off, is a tip: outside VAT, inside the Act. A compulsory one is part of the price: standard rated, the business’s revenue, and only then subject to the fairness rules. Chapter two settles the wording; chapter seven lists it among the five ways troncs go wrong, four of them visible in the paperwork before HMRC visits.
FACTS
The tax that never changed
The Act rearranged who gets the money, not what HMRC takes from it: tips are taxable income, always, through the tronc’s own PAYE scheme run by the troncmaster. The saving is National Insurance only, employer and employee both, resting on fifty-year-old NIC law that works exactly as intended for as long as the employer does not decide the shares.
8 chapters
From what changed to the setup steps, a fortnight of admin
£652
Extra in each of twelve pay packets on the demo tronc
FACTS
The five ways it goes wrong
The owner sets the shares, and independence dies with back years of NIC due. An admin fee is skimmed, banned outright since October 2024. Distribution drifts past the month-after deadline, a breach with a date stamp. The compulsory service charge gets treated as a tip, with historic VAT due on all of it. And the written policy, the cheapest document the Act requires, is the one most commonly missing.