If you’re running a hospitality business, you already know that tips and service charges are essential to your staff’s total earnings. You also know that tip distribution right isn’t optional anymore. Since the Employment (Allocation of Tips) Act came into force in October 2024, you’re legally required to distribute
tips fairly and within strict timeframes.
The most cost-effective way of distributing tips is through a tronc scheme, which saves you the cost of Employers’ and Employees’ National Insurance. Like payroll, you have options on how you manage this, either in-house, and appoint an eligible employee as your Troncmaster, or outsource to an independent service who provide Troncmaster services.
If you are already outsourcing your payroll, you understand the benefits of outsourcing to experts, but what can be less appealing is the thought of bringing in yet another company to do this and try and co-ordinate with your payroll provider.
This is where the third option comes in – have your tronc scheme handled under one roof alongside your payroll. And here’s why this solution makes so much more sense.
The problem with DIY tronc schemes
Managing a tronc scheme yourself sounds straightforward until you’re actually doing it. You need to collect all the tips and service charges, work out who gets what based on agreed allocation rules, process everything correctly through HMRC, and keep detailed records in case you’re ever audited.
And, this has to be managed by a Troncmaster, someone who is independent of running the business or any hiring responsibilities. And this employee needs to be doing all this while doing their usual job. It’s a lot to ask.
The risks of getting it wrong aren’t small either. If your tronc scheme isn’t fully compliant with HMRC rules, you lose the Employer NI exemption. That means you’re suddenly paying 15% NI on every pound of tips you distribute. For a business handling £100,000 in tips annually, that’s £15,000 going to HMRC unnecessarily.
Then there’s the Employment Act to contend with. Tips must be distributed by the end of the month after they have been taken. You must have a written policy. You need to keep proper records. Miss any of these requirements, and you’re looking at potential employment tribunal claims from staff. And, when the new
Employment Rights Bill comes in, you must have a formal consultation with your staff every three years.
Even if you’ve got someone on your team handling it, that’s time they could be spending on tasks that actually drive your business forward. And let’s be honest, the tronc administration probably isn’t what they signed up for.
The hassle of separate providers
The alternative many businesses choose is appointing a third-party tronc service. That solves the compliance problem, and it means you get an independent Troncmaster who handles the allocation decisions.
But here’s where it gets messy. Your payroll is with one provider. Your tronc is with another. Every month, you’re coordinating between two separate systems, two different sets of data, and two separate invoices.
Your tronc provider needs information from your payroll provider to distribute tips correctly. Your payroll provider needs the tronc figures to process everything through RTI. There’s a constant back-and-forth of spreadsheets, emails, and phone calls just to make sure everyone’s working from the same numbers.
And, if something goes wrong , you risk being stuck in the middle trying to work out which provider is responsible and how to fix it without disrupting your payroll run.
It works, but only just. And it’s far more complicated than it needs to be.
The single provider solution
This is where Ascend’s approach makes a real difference. We don’t just process your payroll. Through our sister company Tips and Troncs, we can set up and manage your entire tronc scheme as part of your payroll service.
Everything happens in one place. The tips data flows directly into your payroll processing. There’s no coordination between separate providers because it’s all handled by the same team using integrated systems.
Here’s how it works
Tips and Troncs set up your compliant tronc scheme, help you establish fair allocation rules that your team agrees with, and act as your independent Troncmaster. They handle all the tip distribution calculations every month based on the rules you’ve agreed.
Then, because Ascend processes your payroll, those tronc figures feed seamlessly into your payroll run. No separate data transfers. No reconciliation headaches. No wondering whether your payroll provider has received the latest figures from your tronc provider.
Your staff get their tips processed correctly and on time. You get full HMRC compliance and the Employer NI savings a proper tronc delivers. And you deal with one team, one system, and one monthly invoice.
When simple actually means better
There’s a temptation in business to think that complex solutions are somehow more sophisticated or thorough. But when it comes to payroll and tronc management, simple is almost always better.
Having everything under one roof isn’t about taking shortcuts. It’s about removing unnecessary friction from a process that needs to happen accurately and on time every single month.
You shouldn’t need to be a project manager just to get your staff paid. You shouldn’t spend hours every month coordinating between different providers. And you definitely shouldn’t be losing sleep wondering whether your tronc scheme is going to pass HMRC scrutiny.
Making the switch
If you’re currently juggling separate providers or trying to manage your tronc in-house, there is a better way. At Ascend, we’re already handling payroll and tronc for hospitality businesses. Adding tronc management through Tips and Troncs isn’t a complicated bolt-on. It’s designed to work together from the ground up.
The setup process is straightforward. The ongoing processing is seamless.
One team. One system. One sensible monthly process that actually works.
Contact us to discuss our payroll and tronc options.
