Step by step
How to set up a tronc scheme: troncmaster, PAYE scheme, policy
Updated
A tronc saves National Insurance only if it is set up so that the troncmaster, not you, decides who gets what.
Talk to a specialist What your team shares in a year and who decides the split. The rates come from GOV.UK.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- When National Insurance is due. GOV.UK's tronc guidance: if you decide how the tronc money is divided, you pay PAYE tax and NICs; if the troncmaster, or someone else not acting for you, decides, the troncmaster pays PAYE tax and no NICs are due. (GOV.UK: employee gets tips, gratuities or service charges through a tronc)
- The rates. From 6 April 2026 to 5 April 2027, category A employees pay 0% up to £242 a week, 8% from £242.01 to £967 and 2% above; employers pay 15% above £96 a week. (GOV.UK: National Insurance rates and category letters)
- The thresholds. The secondary threshold is £5,000 a year and the primary threshold £242 a week for 2026 to 2027. (GOV.UK: rates and thresholds for employers 2026 to 2027)
- Employment Allowance. An eligible employer can reduce its annual National Insurance bill by up to £10,500, so a small employer whose bill is already covered by the allowance saves less than shown. (GOV.UK: Employment Allowance)
- The Tips Act duties. Whoever shares the tips must follow the statutory Code of Practice: a written tipping policy, a record of every tip kept for three years, and an answer to a worker's request, limited to one per worker every three months. (Code of practice on fair and transparent distribution of tips)
- What is not worked out. One year at 2026/27 rates; it does not split each worker's pay week by week, and assumes your shares add up to what your staff actually earn. A troncmaster needs a separate PAYE scheme set up with HMRC.
1. Appoint a troncmaster
The troncmaster decides how the money is divided. If you, or someone acting for you, decides, NICs are due as on any other pay.
Source: GOV.UK: employee gets tips, gratuities or service charges through a tronc
2. Set up the tronc PAYE scheme
You tell HMRC who the troncmaster is so it can set up a PAYE scheme for the tronc, and the troncmaster runs a payroll for the tronc payments.
Source: GOV.UK: employee gets tips, gratuities or service charges through a tronc
3. Write the policy and keep the records
- A written policy on how tips are shared.
- A record of every tip, kept for three years from the date it was paid.
- An answer to a worker's written request for the records, limited to one request every three months.
Source: Code of practice on fair and transparent distribution of tips