TroncTally

Free calculator

Tronc calculator: payroll vs tronc NICs

Tips the employer pays through payroll carry Class 1 National Insurance like wages; tips shared by an independent troncmaster, with no employer involvement in who gets what, do not. For a worker on £1,600.00 a month with £300.00 of tips, that is £69.00 a month less NICs (2026 to 2027 rates). Type your own pay and tips per worker.

Starting rows are sample data. Pay and tips for the same month; kept in this browser only.

Result, 2026 to 2027 rates

£161.00 less National Insurance a month

on £700.00 of tips through an independent tronc, about £1,932.00 a year.

Employer NICs saved
£105.00
Staff NICs saved
£56.00
National Insurance per worker, through payroll and through a tronc
WorkerPayroll NICsTronc NICsSaved
Server 1£290.61£221.61£69.00
Server 2£157.21£106.61£50.60
Chef£424.01£382.61£41.40

Employee plus employer Class 1 NICs, each month worked on its own. Income tax is due either way, so it is not in the difference. The saving only exists if the employer neither pays nor decides the allocation of the tips.

Doing this every month? The Pro tips pack keeps the records.

An Excel workbook with live formulas (shifts to hours to shares to pay), a 3-year record sheet, your policy as a print-ready document and a one-page staff notice.

See the tips pack

How it works

For each worker the calculator works Class 1 National Insurance twice for the same pay period: on pay plus tips (tips through payroll) and on pay alone (tips through an independent tronc). Employee NICs are 8% between the primary threshold (£1,048.00 a month) and the upper earnings limit (£4,189.00), 2% above it; employer NICs are 15% above the secondary threshold (£417.00 a month). For a worker under 21 the employer pays nothing up to the upper secondary threshold (£4,189.00).

Income tax is due in both cases: a tronc runs its own PAYE scheme in the troncmaster's name. The saving only exists when HMRC's two conditions are met: the tips are not paid to the worker by the employer (directly or indirectly, or out of money the employer received), and they are not allocated by the employer. If the business decides the split, NICs are due whatever the arrangement is called. Tips never count towards National Minimum Wage pay.

The figures ignore the Employment Allowance (up to £10,500.00 off the employer's bill for 2026 to 2027 if the business qualifies) and the annual method for directors. Use the tip split calculator first and the button above copies the names and shares in.

Sources

Frequently asked questions

What is a tronc?
A tronc is a special pay arrangement for sharing tips, gratuities and service charges, run by a troncmaster: a person other than the employer who decides the allocation. HMRC guide E24 sets out when it takes the tips out of National Insurance.
Is income tax due on tronc payments?
Yes. HMRC says a PAYE scheme must be set up for the tips in the troncmaster's name, and the troncmaster is personally responsible for running it. Only National Insurance can drop out.
Can a manager be the troncmaster?
The Code of Practice says an employer may appoint a member of staff to allocate and distribute tips, and that person can act as an independent tronc operator. For National Insurance, what counts is that the employer is not involved in the allocation.
Why is the saving smaller for some staff?
NICs only apply above the thresholds. If a worker's pay plus tips stays under the primary threshold, there are no employee NICs to save; for under-21s there are no employer NICs below the upper secondary threshold.

Guides