# How to Set Up a Tronc Scheme Without a Consultant (UK, 2026)

> An independent tronc keeps tips off the 15% employer and 8% employee National Insurance charge that applies to ordinary wages, but only if you meet HMRC's independence test. Here is the DIY setup path, what the Employment (Allocation of Tips) Act 2023 already requires, and what changes again from October 2026.

- Author: Alex Riesenkampff (Super44)
- Published: 2026-07-16
- Canonical: https://super44.ai/blog/uk-tronc-scheme-guide

## Key takeaways

- An independent tronc keeps tips out of National Insurance entirely: no 15% employer charge and no 8% taken from the employee's share, provided the employer never decides who gets what or how much (HMRC, PAYE72080; NIM02952).
- Since 1 October 2024, the Employment (Allocation of Tips) Act 2023 has required employers to pass on 100% of qualifying tips within a strict deadline: by the end of the month following the month a customer paid (s.27G).
- A May 2025 employment tribunal found a tronc paying up to half of one waiter's income was "intrinsically linked" to his job and should count toward holiday pay, because the arrangement failed HMRC's independence test. The ruling is under appeal.
- From October 2026, pending Parliamentary approval, employers will have to consult staff before writing or changing a tipping policy and review it at least every three years, on top of the 2024 rules.
- None of five UK troncmaster and tronc-software providers checked publish what an outsourced troncmaster actually costs. The only figure found anywhere was a £20-a-month software add-on.

An independent tronc scheme does not require hiring a troncmaster service or paying an accountant to set one up. **What it requires is meeting HMRC's independence test: the employer never decides who gets tips or how much they get, a troncmaster runs a separate PAYE scheme, and the whole arrangement follows the Employment (Allocation of Tips) Act 2023.** Get that right, and tips distributed through the tronc stay out of National Insurance altogether: no 15% employer charge and no 8% taken from the employee's share, the rates that apply once tips are run as ordinary wages (HMRC, PAYE72080; GOV.UK, Rates and thresholds for employers 2026 to 2027). Miss it, and the exemption disappears, sometimes with a backdated bill attached.

This guide covers the DIY path: what actually makes a tronc independent, what it is worth in National Insurance terms, what the 2024 Act already requires of you, how to set one up without an outsourced troncmaster, a 2025 tribunal case that shows what happens when independence fails, and a consultation duty arriving in October 2026 that most existing guides do not mention yet.

## What actually makes a tronc independent, in HMRC's own words

**HMRC treats a tronc as independent, and therefore free of National Insurance, only when the employer takes no part in deciding who receives tips and how much each person gets.** Its PAYE manual defines a tronc as "an organised arrangement for sharing tips amongst employees by a person who is not the employer," run by a troncmaster who "accepts and understands the role" (PAYE72080). The National Insurance Manual is blunter about the employer's side of the bargain: "the employer must not be involved in the process of distribution to tronc members" (PAYE20160).

The test has more nuance than owners often assume. An employer can choose which staff are included in the tronc, front of house but not kitchen, say, without losing the exemption. HMRC's manual calls this out directly: "allocation" means deciding both who benefits and how much, so controlling only the first half is not enough to break independence (NIM02952). A contractual right for staff to participate in the tronc does not break it either (NIM02950). Where employers do trip the wire is in who they put in charge: HMRC's guidance on choosing a troncmaster warns that appointing "an individual who influences how the business is run, for example, a company director," can itself look like indirect employer allocation (NIM02942).

## What running tips outside a tronc actually costs you

**The gap between an independent tronc and ordinary payroll is the full Class 1 National Insurance charge on every pound of tips, not a discount on it.** Once tips are treated as wages, the employer's secondary Class 1 rate of 15% applies above the £5,000 annual secondary threshold, and the employee's own primary rate takes 8% out of their share up to the upper earnings limit (GOV.UK, Rates and thresholds for employers 2026 to 2027). Neither charge applies to tips paid out through a genuinely independent tronc.

**What running tips through payroll, instead of an independent tronc, would cost** *(interactive calculator in the web version)*

Example (Tips paid out per month: 4,000 £):

- Employer National Insurance you would owe in a year: 7,200 £
- National Insurance taken out of staff pay in a year: 3,840 £

*Illustrative, using the 2026 to 2027 employer secondary Class 1 rate (15% above the £5,000 annual secondary threshold per employee) and the employee primary rate (8% above the £12,570 primary threshold per employee). Both thresholds apply individually to each worker, so a venue distributing tips across several staff may owe less employer NIC — or none — because each person's tips fall below £5,000 a year. The formula above ignores both thresholds for simplicity; treat it as an upper-bound estimate, not a precise calculation. An independently run tronc, where the employer does not decide individual allocations, keeps both charges off tips entirely (HMRC, PAYE72080; NIM02952).*

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A neighbourhood venue collecting £4,000 a month in tips is looking at roughly £7,200 a year in employer National Insurance alone if that money runs through ordinary payroll rather than an independent tronc, on top of whatever is taken from staff pay. That gap is what makes the setup worth doing properly rather than skipping it because a consultant's quote looks expensive; it is also the same National Insurance line item that shows up in [what one percentage point of labour cost is worth to a venue's bottom line](/blog/restaurant-labour-cost-percentage).

## What the Tips Act already requires, since October 2024

**The Employment (Allocation of Tips) Act 2023 has applied in full since 1 October 2024, and it sets rules that exist regardless of whether a tronc is used.** Three of its provisions matter most for an independent venue. First, tips must be passed on in full: the Act voids any term requiring a worker to reimburse the employer out of their tips, with only very limited exceptions such as deducting income tax (s.27W). Second, there is a hard payment deadline: tips must reach the worker "no later than the end of the month following the month" the customer paid, so a tip taken in June has to be paid out by the end of July (s.27G; Code of Practice on fair and transparent distribution of tips).

Third, a written tips policy is required wherever tips are received "on more than an occasional and exceptional basis" (s.27I), setting out how tips are allocated between workers, and records of tips and their allocation have to be kept for three years, with staff able to request their own figures and the venue's total once every three months (s.27J). None of this is optional whether or not you run a tronc; it is the baseline every UK venue taking tips has been operating under since October 2024.

## Setting up your own tronc without an outsourced troncmaster

**HMRC does not require a troncmaster to be a professional, and appointing one is the one step in this process an independent venue cannot skip.** The practical setup, in order:

1. **Appoint the troncmaster.** A front-of-house team member, a bar supervisor, or an elected tronc committee all work. Avoid a director or anyone who already sets business decisions, since HMRC treats that as a sign the employer is influencing distribution even if they never say a word about it (NIM02942).
2. **Agree how tips will be shared.** Even split, points weighted by hours or role, or seniority-based, the choice is the tronc's to make, and the employer can still say who is eligible without breaking independence (NIM02952). Write the method down.
3. **Register a separate PAYE scheme in the troncmaster's name.** HMRC's E24 guidance is explicit that this scheme has to be kept apart from the employer's own payroll, and that the troncmaster is "personally responsible for all aspects of operating" it, including deducting the right tax. Tips should not pass through the employer's normal payroll run.
4. **Write the tips policy the Act requires.** Cover how tips are allocated, when they are paid, and how staff can see their own records, and keep it somewhere every worker can find it.
5. **Keep records for three years**, and be ready to hand a worker their own allocation and the venue's tip total if they ask, once every three months at most (s.27J).

**Three ways to appoint a troncmaster, and what they typically cost**

| Option | Typical cost | Independence risk |
| --- | --- | --- |
| A staff member (not a manager or director) | Usually unpaid, occasionally a small allowance | Lowest, provided they decide allocations without management steering them |
| An elected tronc committee | Unpaid | Low; the model HMRC treats as straightforwardly independent |
| An outsourced troncmaster service | Rarely published; see note | Independent by design, but still your job to write the policy and hit the Act's deadlines |

*Croner, IRIS, 3E's Accountants, Buzzacott and Tips and Troncs all publish guidance on choosing a troncmaster; none discloses what an outsourced troncmaster service actually charges. The only figure found anywhere in this research was WMT's Troncbox software add-on at £20 per site per month, a tool sold alongside the human service, not the service fee itself.*

Every published guide checked for this article, from accountancy firms to payroll software vendors, stops at this same point: appoint a troncmaster, write a policy, keep records, then book a consultation or request a quote for the part that actually costs money. None of them publish a template constitution or a worked allocation example an independent operator can copy directly. If your team is small enough that a staff member or a committee can run it, there is no step above that a paid service does differently, other than doing it for you.

## The tribunal case that shows what independence failure actually costs

**A May 2025 employment tribunal found that a tronc run through the employer's own payroll was not independent, and ordered the tips involved to count toward a waiter's holiday pay.** In Palanki v The Big Table Group Ltd, tronc payments reportedly made up as much as half of the claimant's income at a Las Iguanas restaurant. Because the tips were processed through the same PAYE system, payslip and payroll as his ordinary wages rather than a separately run scheme, the tribunal treated them as "intrinsically linked" to his work and ruled they should count toward his holiday pay; he had sought £5,444.40 in unpaid holiday pay on that basis, according to a case summary from Kuits Solicitors, though neither Kuits nor other law-firm coverage confirms the final sum actually awarded. The Big Table Group is appealing the decision, and an employment tribunal ruling is not binding on other cases, so treat it as a warning rather than settled law.

The lesson for an independent venue is narrower than the headline: it is not that troncs are risky, it is that a tronc processed through the employer's normal payroll, rather than the troncmaster's separate PAYE scheme HMRC's E24 guidance requires, can fail on two fronts at once. It loses the National Insurance exemption, and it can now be argued into holiday pay calculations too. UKHospitality has floated an early estimate that a similar finding could add "£10,000 or more per year for some models" for affected operators, though that figure has not been independently verified against a named methodology, so treat it as a directional warning rather than a hard number for your own venue.

### Other ways an otherwise well-meaning tronc breaks independence

Running tips through the normal payroll is the most visible failure, but HMRC's own manuals flag three quieter ones worth checking against your own setup:

- **The employer decides individual amounts.** Choosing which staff are in the tronc is fine; deciding that Anna gets more than Ben because of how the shift went is not, once the employer, rather than the troncmaster, makes that call (NIM02952).
- **The troncmaster is someone who runs the business.** A director or an owner acting as troncmaster looks, to HMRC, like the employer allocating tips through a proxy, even without any explicit instruction (NIM02942).
- **A "system" quietly reflects the employer's wishes.** HMRC treats an allocation method the employer designed and controls, so that the outcome tracks what the employer would have chosen anyway, the same as direct allocation, even if no one at the venue signs off on individual amounts (NIM02942).

None of these require bad faith to trip. A well-run cafe that lets its manager "help out" with the tronc spreadsheet each week, without meaning anything by it, is closer to this line than it looks.

## What changes again on 1 October 2026

**A new duty, due to take effect on 1 October 2026 subject to Parliamentary approval, will require employers to consult staff before writing or changing a tipping policy.** The Employment Rights Act 2025 adds this on top of the rules that have applied since 2024: employers will need to consult workers or their representatives when creating or revising a written tipping policy, and review it at least every three years. A revised statutory Code of Practice reflecting the change was published on 29 June 2026. Buzzacott's analysis of the incoming rule notes a new tribunal penalty of up to £5,000 for financial loss caused by failing to consult properly.

As of this article's publication in July 2026, that requirement is not yet law; the 2024 Act's rules, on payment deadlines, the written policy itself, and record-keeping, are what apply today. But an independent venue setting up a tronc now should build the habit of asking staff for input before finalising the policy, since that is the practice the October 2026 duty will formalise anyway.

## Why this is worth getting right now, not later

**Card payments already dominate UK tipping, and card tips cannot be quietly kept off the books the way cash tips sometimes were.** An analysis of more than a million UK hospitality transactions between June 2024 and February 2026 found contactless payments carry a tipping rate of just 4.6%, against 14.9% for chip card transactions, while the average tip value rose sharply over the same period (Retail Focus, covering data from Paynt's URocked tipping platform). As card and app payments keep displacing cash, more of a venue's tips arrive already logged, with an obvious paper trail if HMRC or an employment tribunal ever asks how they were handled.

That trend sits alongside a UK hospitality labour market where margins are already tight: labour costs climbed to 35% of revenue at venues covered by a 2025 industry report drawing on more than 35,000 hospitality workers, even as staff turnover eased from 75% to 67% over the same period (Craft Guild of Chefs, covering Pineapple/Sona's H1 2025 Insights Report). A properly run tronc will not fix a labour cost problem on its own, but it is one of the few levers where getting the paperwork right, rather than negotiating pay, changes what a venue actually keeps. As Jane Pendlebury, CEO of HOSPA, put it discussing the association's own tips and troncs guidance: "This isn't simply an issue affecting payroll, it also affects finance, HR, operations, recruitment and the way businesses communicate with their teams." Treating it as a five-minute payroll setting, rather than an arrangement with its own independence test, is usually where things go wrong. If you already use AI to draft policy documents, [the same role, context and format structure that works for a staff rota built around legal minimums](/blog/ki-prompts-gastronomie) works just as well for the written tips policy the Act requires, provided you feed it your actual allocation method rather than asking it to invent one.

## FAQ

### Does my troncmaster have to be a professional or an outside service?

No. HMRC does not prescribe who the troncmaster should be, and it is routinely a staff member with no accountancy background. The risk sits with choosing someone who already influences how the business is run, such as a director, because HMRC treats that as a sign the employer has indirectly allocated the tips (HMRC National Insurance Manual, NIM02942). A front-of-house team member or an elected tronc committee is the safer, and cheaper, choice for most independent venues.

### Can I still decide which staff are included in the tronc?

Yes. HMRC's own guidance confirms that an employer can decide who benefits from an independent tronc, such as excluding kitchen staff or managers, without losing the National Insurance exemption, provided the employer does not also decide how much each person receives. HMRC calls this the two-part "allocation" test: it only breaks the exemption when the employer controls both who and how much (NIM02952).

### What actually happens if HMRC decides my tronc was not independent?

The National Insurance exemption is lost, and HMRC can pursue the employer for the Class 1 contributions that should have been paid on those tips, potentially backdated. The 2025 Palanki tribunal case shows a second, separate risk: tips that a tribunal decides are ''intrinsically linked'' to the job can also count toward holiday pay, on top of any NIC liability, if the arrangement runs through the employer's own payroll rather than a genuinely independent one.

### Do I need a separate PAYE scheme just for the tronc?

Yes. HMRC's E24 guidance is explicit that a PAYE scheme must be set up in the troncmaster's name, kept entirely separate from the employer's own PAYE scheme, and that the troncmaster is personally responsible for operating it correctly. Running tip payments through the employer's existing payroll, even informally, is one of the clearest markers HMRC and tribunals have used to decide a tronc was not really independent.

### What changes for tronc schemes on 1 October 2026?

Employers will be required to consult workers, or their representatives, before creating or changing a written tipping policy, and to review that policy at least every three years, under a duty introduced by the Employment Rights Act 2025. This sits on top of the rules already in force since October 2024: passing on 100% of tips, the monthly payment deadline, and the written policy itself. The change is expected to come with an updated statutory Code of Practice and new tribunal enforcement, though it is still subject to Parliamentary approval as of mid-2026.

## Sources

1. [HMRC PAYE Manual: PAYE72080, Particular pay problems: tips, gratuities and troncs](https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye72080) — Defines the tronc and troncmaster; sets out the condition that the employer must not be involved in distribution
2. [HMRC PAYE Manual: PAYE20160, PAYE operation: v to z: troncs](https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye20160) — Requires an organised arrangement and an accepted troncmaster; the tax obligation stays with the employer if no genuine tronc exists
3. [HMRC National Insurance Manual: NIM02941, Class 1 NICs: tips: what is a tronc](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02941) — A tronc is a special pay arrangement; distribution is a matter for the troncmaster, not the employer
4. [HMRC National Insurance Manual: NIM02942, Class 1 NICs: tips: what is a troncmaster](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02942) — HMRC does not prescribe who the troncmaster should be; a director or other influential figure risks looking like indirect employer allocation
5. [HMRC National Insurance Manual: NIM02950, Class 1 NICs: tips: contractual right to a tronc payment](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02950) — A contractual right to participate in a tronc does not by itself break the NIC exemption
6. [HMRC National Insurance Manual: NIM02952, Class 1 NICs: tips: employer decides who benefits](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02952) — The employer can choose who is included without losing the exemption, as long as it does not also decide how much each person gets
7. [HMRC guidance E24: Tips, gratuities, service charges and troncs](https://www.gov.uk/government/publications/e24-tips-gratuities-service-charges-and-troncs/guidance-on-tips-gratuities-service-charges-and-troncs) — Requires a separate troncmaster PAYE scheme, kept apart from the employer's scheme; troncmaster is personally responsible for running it. Updated 18 July 2025
8. [Employment (Allocation of Tips) Act 2023, full text](https://www.legislation.gov.uk/ukpga/2023/13) — Sections 27G (payment deadline), 27I (written policy requirement), 27J (record-keeping), 27W (no deductions)
9. [The Employment (Allocation of Tips) Act 2023 (Commencement No. 2) Regulations 2024](https://www.legislation.gov.uk/uksi/2024/829/made) — Brought the substantive duties into force on 1 October 2024
10. [GOV.UK: Code of Practice on fair and transparent distribution of tips](https://www.gov.uk/government/publications/distributing-tips-fairly-statutory-code-of-practice/code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version) — Worked example of the monthly payment deadline; record-request limits; scope of the written policy requirement
11. [GOV.UK: Distributing tips fairly, revised statutory code of practice](https://www.gov.uk/government/publications/distributing-tips-fairly-revised-statutory-code-of-practice) — Published 29 June 2026; adds a worker-consultation duty; due to take effect October 2026 subject to Parliamentary approval
12. [GOV.UK: Rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027) — Employer secondary Class 1 NIC rate 15%, secondary threshold £5,000 a year, Employment Allowance £10,500
13. [Kuits Solicitors: Palanki v The Big Table Group Ltd](https://www.kuits.com/palanki-v-the-big-table-group-ltd/) — Tribunal summary: tronc processed through the employer's own payroll found not independent; claimant sought £5,444.40 in unpaid holiday pay (final awarded sum not confirmed in this summary)
14. [Freeths: Should employees receive tips while on holiday?](https://www.freeths.co.uk/insights-events/legal-articles/2025/should-employees-receive-tips-while-on-holiday/) — Confirms The Big Table Group is appealing the Palanki decision
15. [UKHospitality: Why getting tips and Tronc right in 2026 matters more than ever](https://www.ukhospitality.org.uk/why-getting-tips-and-tronc-right-in-2026-matters-more-than-ever/) — Reports the ongoing tribunal question over tronc payments and holiday pay, with an early cost estimate for affected venues
16. [UKHospitality: Nervous about October? Understanding what a Tronc council really means for your business](https://www.ukhospitality.org.uk/nervous-about-october-understanding-what-a-tronc-council-really-means-for-your-business/) — Describes the incoming worker-consultation duty and its three-year policy review requirement
17. [Buzzacott: Big changes coming to tipping, what 1 October 2026 means for employers and workers](https://www.buzzacott.co.uk/insights/big-changes-coming-to-tipping-what-1-october-2026-means-for-employers-and-workers) — Sets out the new consultation duty and a tribunal penalty of up to £5,000 for financial loss caused by failing to consult
18. [Hospitality Net, covering HOSPA's tips and troncs guide](https://www.hospitalitynet.org/news/4133198/two-years-on-hospas-tips-and-troncs-guide-sets-out-clear-advice-for-hospitality-businesses-in-the-uk) — Quotes Jane Pendlebury, CEO of HOSPA, on why tips and tronc detail crosses payroll, finance, HR and operations
19. [Craft Guild of Chefs: Report finds hospitality staff turnover drops by almost 10%](https://craftguildofchefs.org/news/report-finds-hospitality-staff-turnover-drops-almost-10) — Covers Pineapple/Sona's H1 2025 Insights Report: turnover fell from 75% to 67%, labour costs climbed to 35% of revenue
20. [Retail Focus: New Paynt data on how payment methods are reshaping tipping behaviour across UK hospitality](https://retail-focus.co.uk/new-paynt-data-highlights-how-payment-methods-are-reshaping-tipping-behaviour-across-uk-hospitality/) — Contactless payments carry a 4.6% tipping rate versus 14.9% for chip card, across more than a million transactions, June 2024 to February 2026
21. [WMT Troncmaster Services: Troncbox pricing](https://www.troncbox.com/pricing) — Only publicly disclosed troncmaster-adjacent fee found in this research: £20 per site per month for the Troncbox Plus add-on