Tronc Calculator
NIC Savings of up to 15% -
Save Money For Your Business & Employees
Using a tronc system to distribute service charges can result in significant National Insurance (NI) savings for both employers and employees. In a properly administered tronc, tips and service charges are considered separate from wages and, under current UK tax rules, are not subject to Employer National Insurance Contributions. This means that for every £1,000 distributed via a tronc, an employer could save £150 in NI costs (as at April 2025). Over the course of a year, especially in hospitality businesses with high service charge income, these savings can add up.
Managing Gratuities
Cost Comparison via PAYE
Businesses can manage tips and service charges in several different ways, each with varying tax implications and administrative requirements. Here are the main approaches:
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Direct Tips from Customer to Employee
When a customer clearly intends a tip for a specific employee, it can be given directly-either in cash or through electronic platforms like mobile tipping apps. This method is commonly used in sectors like hairdressing and taxi services, and can also apply in hospitality settings where an individual delivers a personalised service (e.g. a barista). These tips are the responsibility of the employee to declare for tax purposes and are not subject to employer National Insurance. -
Tips Pooled and Distributed via Payroll (Without Tronc)
When tips or service charges are collected by the business and redistributed through payroll without a tronc scheme, they are treated as standard earnings. As a result, they are subject to Income Tax, Employee NI, and Employer NI contributions (15%). This approach is simple to manage but can reduce take-home pay and increase costs for the employer. -
Tips Distributed Through a Tronc Scheme
A tronc system allows pooled tips or service charges to be distributed through the employer’s PAYE system but exempt from Employer National Insurance. This can result in significant savings for the business while also improving employee net earnings. For a tronc scheme to be compliant, it must be independently managed by a troncmaster, who is responsible for how the funds are allocated.
Businesses can either establish an in-house scheme that meets HMRC's strict criteria, or they can partner with a specialist provider like Troncmaster Solutions to ensure full compliance and transparency.
This calculator is designed to help employers and employees understand the financial impact of distributing service charges either through payroll, or via a tronc system. By entering the amount of service charge, the tool illustrates how much the employee will take home after income tax and National Insurance deductions, and how much the employer will pay in additional costs such as Employer National Insurance contributions (where applicable).
Note: These calculations are only for illustrative purposes and are not a substitute for professional advice.
For employees, while they are still required to pay Income Tax, their liability for Employee NI may also be reduced depending on how the tronc is structured and administered. This can result in a higher take-home pay compared to receiving the same amount through standard payroll. By using a compliant tronc system, businesses can reduce overhead costs, improve staff earnings, and enhance recruitment and retention - all while remaining within legal HMRC guidelines. It’s a strategic way to make the most of service charge income for the benefit of both the business and its people.
What will a Tronc scheme cost?
One of the most common questions businesses ask is: what will a tronc actually cost? It’s a fair concern, and transparency matters. Our fees are simple, competitive, and designed to scale with your business, so you only pay for what you need. No hidden charges, no set up fee, no surprises, no locked in contract, just clear pricing that helps you manage tips and service charges with confidence.
Our weekly tronc management fee starts from £35 + VAT for up to 15 employees, £55 for 16-50 and £75 for 51-100, with a minimum monthly fee of £125 + VAT.
Find out exactly what our fees are:
Tips, gratuities and service charges: what's the difference?
Tips and gratuities are voluntary payments from customers. A service charge is added to the bill by the business and can be mandatory or optional. They are handled and taxed differently, which is why the way you distribute them affects your National Insurance bill.
Read our full guide to tips, gratuities and service charges
Case Study:
Boutique Hotel Chain Save Over £19,000 a Year
How a boutique hotel chain was able to save more than £19,000 per year by implementing a compliant independent tronc scheme. By restructuring how service charge payments were distributed, the business reduced its National Insurance liability while ensuring staff continued to receive tips fairly and transparently. Read more:
