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HMRC internal manual

National Insurance Manual

Tips, gratuities and service charges: Tronc arrangements: Secondary contributor requests amendments to tronc rules

Where a tronc run independently of the secondary contributor, (usually the employer),implements changes at the employer’s request this may raise a doubt about theindependence of that tronc. Before reaching any conclusion about NICs liability establishwhether condition 2 of the gratuity disregard (NIM02922) issatisfied. (Condition 1 of the gratuity disregard (NIM02921)will not be satisfied where the amounts paid to the tronc comprise or represent sums paidby customers to the secondary contributor). You should bear in mind that

allocate means deciding

  • who is to be the recipient of the payment and
  • how much the recipient is to get.

The employer does not allocate a payment to a particular earner merely because he asksthe tronc and or its members to consider changing the rules.


The facts

Bruno and Antonio run a restaurant. The tips are paid through a tronc run by Dino. Theother staff elected him. He decides who will participate in the tronc and how much eachparticipant will get. Dino has chosen to restrict tronc membership to those who haveworked in the restaurant for a minimum of six months.

Bruno and Antonio point out to Dino there are problems with recruitment. They suggest Dinomight consider extending participation in the tronc but it is clear they do not imposeanything regarding the way Dino operates the tronc. Dino decides, with staff approval, toallow all staff to participate in the scheme.


Bruno and Antonio have influenced who shall participate in the tronc, but they have notdetermined how much each person receives. They are not directly or indirectly allocatingthe tips because Dino continues to determine who gets what. Therefore, in thesecircumstances no NICs are due on the tips distributed by the tronc.