Tronc and Tips in Glasgow Restaurants: Payroll, PAYE and the 2024 Act

The Employment (Allocation of Tips) Act 2023 came into force in October 2024, requiring employers in Glasgow restaurants, bars, and hospitality venues to pass 100% of qualifying tips to workers. Tips paid via card or electronic payment through a tronc scheme are subject to income tax through PAYE. Tips left in cash and handed directly to staff are not subject to employer NI but must still be declared by workers for income tax purposes.

What the Tips Act requires

Employers must now pass all tips, gratuities, and service charges to workers without any deductions (other than tax). This includes tips left on card, included in a service charge, and distributed through a tronc system. Employers must have a written tips policy and keep records of tip allocation for at least three years. Workers have the right to request information about the employer's tipping record.

What is a tronc?

A tronc is a system for pooling and distributing tips among staff. A tronc is run by a troncmaster who may be a senior member of staff, the employer's payroll provider, or an independent tronc operator. Where tips are distributed through a properly operated tronc, employer National Insurance is not due on the tronc payments — but income tax is still deducted through PAYE. This employer NI saving is the primary tax benefit of a well-run tronc scheme.

PAYE and the troncmaster

The troncmaster operates their own PAYE scheme to deduct income tax from tronc distributions. This is separate from the employer's payroll scheme and must be registered with HMRC. Where an employer incorrectly merges tronc payments with regular payroll, employer NI may be triggered on tips that would otherwise be NI-exempt. Keeping the tronc scheme properly documented protects the NI saving.

Cash tips

Cash tips given directly by a customer to a member of staff are not subject to employer NI. They are, however, subject to income tax and employees must declare them on their self-assessment return (or notify HMRC if they do not normally file a return). Under the Tips Act, employers cannot require staff to surrender cash tips to the business — they must be distributed as received or pooled and distributed through a fair tronc.

Glasgow hospitality compliance checklist

• Have a written tips policy visible to workers.

• Ensure all electronic tips and service charges are distributed to workers in full.

• Register a separate PAYE scheme for the troncmaster if operating a tronc.

• Keep tip allocation records for at least three years.

• Brief workers on their obligation to declare cash tips for income tax.

Countify's payroll management team in Glasgow can set up and operate a compliant tronc scheme for your hospitality business, including troncmaster PAYE registration and distribution calculations.