HM Revenue and Customs has finally released its new E24 guidelines on tronc – and is a huge retreat from its previous position.
In brief, the new guidelines state:
In effect the revenue has conceded that an employer can offer advice on how tronc is allocated provided the troncmaster is not the employer and the troncmaster freely decides how the tronc is divided. It still remains vital that proper records of meetings and divisions are kept.
Tronc can also be distributed through the payroll on behalf of the troncmaster.
Discretionary service charge and non-cash tips still belong to the business and as much of this money as is deemed fit by the business can be retained for credit car charges, breakages etc. The remainder constitutes the tronc and is therefore not subject to NIC.
The revenue has also conceded that a general right to participate in the tronc, with no amount specified on the employment contract is now acceptable. Only specified amounts will be subject to NIC.
The revenue has accepted that employers may pay a salary rate less than the minimum wage and top it up with payments from the tronc, and these tronc payments must go through the employers payroll but as long as the troncmaster has decided how the tronc will be split, this portion will not be subject to NIC.
For more in depth analysis see this week's Caterer.
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