Rate of record
Tips, tronc and the minimum wage
Tips do not count toward NMW pay. Since 1 October 2024 employers must also pass on 100% of tips and publish a tipping policy. Tronc remains tax-efficient but must follow the new statutory code.
Tips do not count toward NMW
Tips have not counted toward NMW pay since 1 October 2009. Base pay must clear the band floor before tips are paid on topgov.uk.
The Allocation of Tips Act 2024
The Employment (Allocation of Tips) Act 2023 came into force on 1 October 2024. It requires:
- 100% pass-through of qualifying tips to workers, no later than the end of the month after they are received.
- Fair and transparent allocation in line with the statutory code of practice.
- A written tipping policy available to all workers.
- Tip records retained for three years; workers can request their own record once a quarter.
Tronc tax treatment
A tronc is an arrangement where a non-employer (the troncmaster) allocates and pays out tips. Distributions through a registered tronc are not subject to employer NI, though employee income tax and (depending on the model) employee NI may apply.
Can the tronc administrator deduct admin costs?
The statutory code allows deductions only where genuinely necessary (e.g. payroll processing fees) and only where the deduction itself is fair. An admin fee that materially reduces the tip pool risks tribunal challengegov.uk.