Are you prepared for the introduction of the Tipping Bill?

The UK Government is bringing in new laws to make the distribution of tips fairer, more transparent, and stop employers from withholding tips from their workers. The Employment (Allocation of Tips) Bill, known as the ‘Tipping Bill’, will require employers to pass on 100% of tips to workers. Cash tips are already protected by law, and this new legislation will go further to cover card payments in an increasingly cashless society.

While the new rules are currently progressing through Parliament and will not come into effect until at least Autumn 2023, it is important that hospitality businesses are prepared by having a tronc system in place.

What is a tronc system?

A tronc is a special pay arrangement that allows businesses in the hospitality sector, such as bars, restaurants, or casinos, to share tips, gratuities and service charges given by customers fairly to staff.

There are various obligations required by HMRC when operating a tronc arrangement. This includes appointing a troncmaster, someone who is personally responsible for all aspects of operating a separate PAYE scheme for the tips. Troncmasters should contact HMRC if they need help in understanding their duties.

Third party tronc specialists are available to provide advice and support with the setup of your tronc scheme. They can also act as your troncmaster.

As shown below, who allocates the tips will determine how these should be processed and reported to HMRC.

If you would like to discuss whether a tronc could be of benefit to your business, please contact our EQ Leisure specialists via leisure@eqaccountants.co.uk or call one of our offices.

Alternatively, for more information or support with any payroll query, or to discuss outsourcing your payroll function, please contact our EQ Accounting team today on info@eqaccounting.co.uk or call 01382 312140.