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News – 19.12.24

Buzzacott advises Rose Street Partners on its investment in Kenwood Damp Proofing PLC

Discover how Buzzacott supported Rose Street Partners on its investment in Kenwood Damp Proofing PLC … Read more

Insight – 18.12.24

Start-up guide: Everything you need to know about Tronc schemes to set your new hospitality business up for success

One challenge for new hospitality businesses is the management of tips and service charges. … Read more

Upcoming event – 16.01.25

VAT on Private School fees training

This in-depth, interactive training seminar is designed to provide school administrators, bursars, finance officers, accountants, and trustees with tailored support and expert insights on the practical implementation of VAT. … Read more

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Last updated: 23 Oct 2023

How tronc schemes can help golf courses achieve savings while remaining compliant with legislative requirements

In the article below, uncover the advantages of tronc schemes for UK golf courses, including National Insurance Contribution savings and compliance with tipping legislative requirements.

In the UK, an increasing number of golf course resorts (resorts) are collecting gratuities, tips and service charges (tips) voluntarily given by their customers, with no obligation to pay such. Primarily, these are collected through food and beverage services. However, many such resorts also receive voluntary tips directly from their members, whereby the tips are accumulated and paid out periodically. However, under the Employment Allocation of Tips Bill (Tipping Bill), resorts will no longer be permitted to retain and distribute tips in this manner.

We commonly see resorts distribute tips to their workers through the main payroll, which means they’re taxed as salary, and workers receive them net of both Income Tax and employees National Insurance contributions (NIC). Additionally, in these circumstances, resorts would be required to pay employers NIC on the distributed tips, leading to increased and unnecessary costs. We have also seen resorts utilise a proportion of the tips collected to offset employer NIC costs, thus reducing the available tips to distribute to workers, which can understandably cause staff dissatisfaction. This practice is prohibited under the Tipping Bill.

This raises the question of how tronc systems can provide relief to such businesses while complying with the legislative requirements of the Tipping Bill.

Owen Russell

+44 (0)20 7556 1280
russello@buzzacott.co.uk
LinkedIn

This raises the question of how tronc systems can provide relief to such businesses while complying with the legislative requirements of the Tipping Bill.

How does tronc work?

By implementing a tronc that meets all necessary criteria, all tips voluntarily given by resort customers qualify for both employers and employees NIC exemption. Given that employer and employee NIC total over 25%, this represents significant savings for both the employer and workers of the employer. Explore the diagram below for a visual comparison of the pre- and post-tronc scenarios.

Maintaining a well-functioning tronc arrangement is crucial to avoiding potential penalties and HMRC challenges, as well as complying with the Tipping Bill.

For resorts seeking to attract and retain talent, having a tronc system can be a valuable competitive advantage. Employers can shed the administrative complexities of tip distribution, while workers can have trust and confidence that their tips will be delivered in full compliance with the law.

What is the new legal requirement?

The Tipping Bill defines how employers must deal with tips voluntarily given by their customers and makes it a legal requirement for the full tip amount to be allocated fairly between workers. This means that resorts will be unable to deduct fees/charges from tips collected and will be required to follow a Statutory Code of Practice to ensure any allocation is fair. In addition, all tips must be paid out to workers by the end of the following month the tip is collected, thus removing any accumulation element of tips over the course of a year. There will also be record-keeping and written tipping policy requirements to adhere to.

How we can help

Buzzacott’s Troncmaster Services distributes more than £27m to 30,000 workers in our portfolio. We believe in transparency and fairness and partner with some of the UK's most prestigious golf courses. We ensure our tailored independent tronc schemes achieve NICs savings and are fully compliant with the Tipping Bill. Get in touch for a troncmaster solution tailored for your resort.

I have to say that this whole process has been amazing. Samantha has been incredibly helpful, answered our main questions, always took ‘we’ve got a change to make’ in her stride, made me feel like nothing was any trouble at all. I could not be happier with the fact we have outsourced this coming from a background of running tronc internally. Thanks so much.
Kirsten – The Belfry

Download our checklist

Download our Tipping Act and Code of Practice Checklist

With the Employment Allocation of Tips Bill (Tipping Act) and Code of Practice set to come into force on 1 October 2024, it's crucial for your business to adequately prepare for compliance. Download our free checklist today to ensure you're ready for the upcoming changes.

Download our checklist now

Get in touch

Call us today on +44 (0)20 7710 3389 or email troncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.

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