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PHKSheetsby PHK Media LtdAll templates
PHKSheetsby PHK Media LtdAll templates

Tips and tronc: what the law requires of employers

  • Last checked
  • 2 official sources
  • Hospitality
  • By PHK MEDIA LTD

Since 1 October 2024, employers must pass on all qualifying tips, gratuities and service charges to workers, without deductions other than tax, and share them fairly. Tips must be paid out by the end of the month after the month the customer paid them. Employers must have a written tipping policy available to all workers and keep a record of tips and how they were shared.

Tips Split Calculator (Tronc, by Hours or Points)Free: Share a pool of tips and service charges between your team by hours worked, points or equal shares, with every penny accounted for.

Step by step

  1. Write a tipping policyMake it available to all workers.
  2. Choose fair factorsFor example role, hours worked, performance, seniority.
  3. Pay out on timeBy the end of the month after the month tips were paid.
  4. Keep a recordWorkers can ask to see it.
  5. Get tax rightFollow HMRC’s E24 guidance on tax and National Insurance.

Factors the Code of Practice lists

  • Type of role or work
  • Basic pay
  • Hours worked in the period
  • Individual or team performance
  • Seniority or level of responsibility
  • Length of service
  • Customer intention

The list is illustrative, not exhaustive. Employers must avoid unlawful discrimination when choosing factors.

Worked example. £600 shared by hours between three people who worked 30, 20 and 10 hours: £300, £200 and £100.

Frequently asked questions

Can an employer keep a share of tips?

No. Employers must pass on all tips and service charges without deductions, except in very limited cases such as income tax.

When must tips be paid to staff?

By the end of the month after the month the customer paid them.

How are tips taxed?

Tips are taxable. Whether National Insurance is due depends on how the tips are paid and who decides the split, so check HMRC’s E24 guidance on tips, gratuities, service charges and troncs.

Sources

This guide is general information, not legal or tax advice. Last checked 4 November 2026. Rules change; check the sources above.