Case Study: How a Tronc Scheme Helped a Boutique Hotel Chain Save Over £19,000 a Year
- Tronc Master Solutions
- 6 days ago
- 2 min read
The Challenge:
A small but growing boutique hotel chain in the UK was facing mounting payroll costs associated with pooled tips and service charges. The business prides itself on high- service delivered by a tight-knit team across bar, restaurant, and housekeeping departments.
Tips- collected from guests throughout the hotel - were pooled and distributed fairly among bar staff, waiters, and room attendants. However, distributing these through the normal payroll meant both the employer and employees were paying National Insurance (NI) contributions on these additional earnings. Over time, this eroded staff take-home pay and added unnecessary cost to the business.
The Solution:
Emma, a specialist at Troncmasters Solutions, reviewed the hotel’s current tip distribution model and quickly identified an opportunity:implementing a compliant tronc scheme that aligned with HMRC guidance and allowed pooled tips to be distributed outside the scope of Employer NI.
Employer National Insurance Contributions are exempted on the portion of income distributed via the tronc.
Employee National Insurance contributions may also be reduced depending on how the tips are structured.
Emma set up a tronc system where tips from the bar staff, waiting staff, and room service were pooled and managed independently, in line with HMRC guidelines.
Integrated the tronc scheme with the existing PAYE system for seamless payroll processing.
The Impact
Staff saw increased take-home pay thanks to reduced NI deductions on the same tip earnings. Employees appreciated the clarity and fairness of the system, resulting in improved morale and reduced staff turnover - a key challenge in the hospitality industry.
Key Benefits:
Significant Cost Savings: The hotel chain saved a total of £19,000 annually by switching to a compliant tronc system.
Annual Employer Savings: £19,000+By removing Employer NI (15%) on pooled tips, the hotel significantly reduced payroll overhead.
Annual Employee Savings: £10,000+
Improved Employee Morale: Employees saw an increase in their take-home pay, which led to improved morale and satisfaction with their work environment.
HMRC Compliance: The tronc system ensured that the hotel chain remained fully compliant with HMRC’s tax regulations, avoiding any potential fines or penalties.
Business Efficiency: The system reduced administrative burdens, as the tronc master handled all aspects of distribution and reporting, streamlining the process for the hotel management team.
What the Client Said
“Emma made what seemed like a complex process feel simple. The cost savings speak for themselves, but the real win is happier staff and a more sustainable reward model.”- Operations Director
See How Much You Could Save:
If your business distributes tips or service charges and you're still paying Employer NI, talk to Troncmaster Solutions. You could be saving more than you think.
Disclaimer: This article has been created for illustrative and informational purposes only. It does not constitute financial, tax, or legal advice. Businesses should consult with a qualified advisor to assess their specific circumstances before making any decisions based on the information provided.