Tronc and Tips PAYE Calculator
A tronc run by an independent troncmaster is exempt from both employer and employee National Insurance, though PAYE income tax still applies. Enter the tips pool, number of staff and allocation method to see take-home pay and the NIC saving.
Tronc and Tips PAYE Calculator
A tronc run by an independent troncmaster is exempt from both employer and employee National Insurance, though PAYE income tax still applies. Enter the tips pool, number of staff and allocation method to see take-home pay and the NIC saving.
Total tips and service charges to distribute in the period (e.g. one month).
Employees sharing the pool. This calculator distributes equally across all of them.
Under a tronc run by an independent troncmaster, neither employer nor employee NIC is due. PAYE income tax applies either way.
Tronc payments made by an independent troncmaster are exempt from employer and employee National Insurance Contributions (HMRC NIM02922 / E24). PAYE income tax at the employee's marginal rate still applies. This calculation assumes basic-rate tax (20%) for all employees.
Check your position with a hospitality accounts specialist
A calculator gives you the shape of the answer. We confirm your exact figures, the reliefs you can claim, and what your business needs to file. No obligation, and we reply within one working day.
How tronc and tips tax works in 2026/27
A tronc is a separate pay arrangement, run by an independent troncmaster who is not the employer, that distributes tips and service charges to staff. The critical tax advantage is that tronc payments are exempt from both employer and employee National Insurance Contributions, under HMRC's longstanding guidance in the Employment Income Manual and the E24 booklet.
PAYE income tax still applies to tronc payments at the employee's normal marginal rate. The troncmaster must operate a PAYE scheme, report payments to HMRC, and deduct income tax before paying employees. The NIC exemption is the only relief: it is not a way to avoid income tax.
If the employer allocates tips directly (adding them to pay slips as earnings), both employer NIC at 15% and employee NIC at 8% apply to the full amount. On a £5,000 monthly tips pool across 10 employees, that is £750 in employer NIC that disappears under a properly run tronc.
The Employment (Allocation of Tips) Act 2023 (effective October 2024) requires employers to pass 100% of tips to staff fairly and transparently, with a written policy. It does not change the tax treatment, but it does mean all tips and service charges must now be tracked and distributed, making a formal tronc arrangement more practical than ad hoc cash distribution.
Frequently asked questions
Is tronc exempt from National Insurance?
Yes, when the tronc is run by an independent troncmaster who is not the employer. Both employer NIC and employee NIC are exempt. PAYE income tax still applies at the employee's normal rate. The exemption does not apply if the employer controls the distribution.
Does the 2023 Allocation of Tips Act change the NIC position?
No. The Act (in force from October 2024) requires employers to allocate 100% of tips to staff fairly and to publish a tips policy, but it does not alter the tax or NIC treatment of those payments. Tronc via an independent troncmaster remains NIC-free.
What does a troncmaster have to do?
The troncmaster must be independent of the employer, operate their own PAYE scheme for tronc payments, calculate and deduct income tax, report to HMRC under RTI, and distribute net payments to staff. Many hospitality businesses use a specialist tronc provider.
Do employees pay income tax on tips through tronc?
Yes. PAYE income tax is deducted at source by the troncmaster using each employee's tax code. The NIC exemption is the only relief: it does not reduce income tax liability.
What happens if the employer keeps any of the tips?
Since October 2024 this is unlawful under the Employment (Allocation of Tips) Act 2023. 100% of tips and service charges must be passed to workers, and any deduction by the employer (other than PAYE income tax) is prohibited.
Want to be sure of your position?
Tell us about your hospitality business and we will confirm your exact figures and the compliance steps that apply to you. No obligation.