Free tool · Hospitality

Tips & tronc calculator

Enter your monthly tips and service charge pool and see what a compliant tronc saves you and your staff in National Insurance each year, compared with paying tips through the employer's payroll. Built by an ICAEW Chartered Accountant who sets these up for Hampshire pubs, cafés and restaurants.

What does this calculator do?

The tips and tronc calculator from Lumi Accountancy compares the two lawful ways a hospitality business can pay card tips and service charges to staff: through the employer's own payroll, where employer and employee National Insurance are due on every pound, or through an independent tronc, where the tips are exempt from National Insurance for both sides and only income tax is deducted. It shows the annual employer NIC saved and the extra amount that lands in staff pockets, using the 2026/27 rates. It's a guide, not advice: whether a tronc is right for you depends on how it's run, and that's a conversation worth having with Chris.

Your tips

Card tips, tips added to the bill and service charges that come to the business before going to staff. Cash tips handed straight to staff are outside this.
How are tips paid out today?
Assumptions and rates used (2026/27)

Assumes every member of staff already earns above the National Insurance thresholds from their wages, so the whole tip is NIC-able when it goes through payroll. Income tax is due on tips under both routes and isn't part of the saving. If you're already using the Employment Allowance to wipe out employer NIC, the employer saving is smaller than shown.

How it works

Why a tronc changes the National Insurance

Tips paid by the employer

When the business collects card tips or service charges and decides how to share them out, HMRC treats the payment like wages. Income tax is deducted through PAYE and both employer and employee National Insurance are due. Since the Employment (Allocation of Tips) Act took effect on 1 October 2024, 100% of tips must be passed to staff, so the employer NIC comes out of the business's own pocket, not the tips.

Tips paid through a tronc

A tronc is a separate arrangement in which an independent troncmaster, not the owner or a director, decides how the pool is shared. Income tax is still deducted through the tronc's own PAYE scheme, but the payments are exempt from National Insurance for the employer and for staff. The exemption only holds if the employer genuinely doesn't control the allocation, which is why the set-up and the paperwork matter.

Common questions

Questions hospitality owners ask about tips and troncs

Not if you want the National Insurance exemption. The troncmaster must be independent of the employer, so an owner, director or anyone the employer directs can't run it. A trusted senior member of staff usually takes the role, with a written tronc policy that the team can see.
Genuinely voluntary tips are outside the scope of VAT and don't count towards the threshold. A compulsory service charge is part of the price of the meal, is standard-rated, and does count. How you word the bill decides which one you have.
No. Since 1 October 2024 the Employment (Allocation of Tips) Act requires 100% of qualifying tips, gratuities and service charges to be passed to workers, allocated fairly, by the end of the month after they were received. Employers must have a written tipping policy and keep records for three years. Deductions for card fees or employer NIC aren't allowed.
Cash tips that a customer gives directly to a member of staff, and that the employer never handles, aren't subject to National Insurance and don't go through your payroll. They're still taxable income, and the individual is responsible for declaring them to HMRC.

Last reviewed September 2026. This calculator is general guidance for hospitality businesses in England and Wales and doesn't replace advice on your own set-up.

Want the tronc set up properly?

Lumi's hospitality packages include tronc registration, the written tipping policy, the tronc PAYE scheme and rota-driven payroll, with a chartered accountant on the end of the phone. Fixed fee, in writing, before you commit.

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