Tipping and tronc law for UK restaurants in 2026: what applies now, and what’s coming

Who this is for

Owners, general managers and anyone else who decides what happens to the tips and service charge in a UK restaurant, café or bar. It covers what the law asks of you now, the change that is still on its way, and how a tronc affects National Insurance. There is a checklist at the end.

What has been law since 1 October 2024?

The Employment (Allocation of Tips) Act 2023, usually called the Tipping Act, came into force on 1 October 2024, with a statutory code of practice on distributing tips fairly. Between them they ask six things of an employer.

1. Every tip goes to the workers. All tips, gratuities and service charges are passed on in full. The only deductions allowed are tax and National Insurance.
2. Tips are shared fairly, by clear and objective factors, as the code sets out.
3. Tips are paid on time: at the latest by the end of the month after the month the customer paid.
4. There is a written tipping policy, available to every worker, wherever tips are paid more than occasionally.
5. There is a tipping record of the tips received and how they were shared, kept for three years.
6. Agency workers are included. They are owed their fair share like everyone else.

What counts as a tip?

Card tips, service charges and tips added to the bill all count. So do vouchers and tokens with a fixed money value. Cash tips count where the business has control or significant influence over them: the code gives telling staff how to share cash tips, or collecting them and sharing them out at the end of a shift or through payroll, as examples (statutory code). Cash a customer hands to one person, which that person keeps without the business deciding anything, sits outside it.

Can we keep some of the service charge, or take off a card fee?

No. A discretionary service charge is a tip under the Act and goes to staff in full. There is no room for an admin fee, a card processing fee or a breakage fund to come off it. The only deductions are tax and National Insurance (the Act; the code).

What does “fair” mean?

The law does not give one formula. The code lists factors an employer may weigh, and says the list is not complete: the type of role (front of house and back of house, for example), basic pay, hours worked while the tips came in, individual or team performance, seniority, length of service and what the customer meant (statutory code). Whatever you choose must be applied consistently, must not discriminate, directly or indirectly, and must be written down in the policy. The code also says employers should consult workers to seek broad agreement that the system is fair, and that a method the workers themselves think fair may help a tribunal decide it is.

What has to be in the tipping record?

Every qualifying tip received at the place of business, and the amount given to each worker, kept for three years from the date the tip was paid. A worker can ask in writing to see it, once in any three months, for a period of up to three years back. They are given the total tips received and their own share, not what anyone else got (statutory code). Store it as you would other personal data.

What happens if we get it wrong?

A worker can take a claim to an employment tribunal. The tribunal can order the tips to be re-shared, order compensation for financial loss of up to £5,000 per worker, and declare publicly that the complaint was well founded (the Act; the code; Hamlins). Acas can help with mediation first.

The consultation step: why “October 2026” is out of date

The Employment Rights Act 2025 adds three duties to the Tipping Act:

• Consult before you write or change the tipping policy, with your workers and with a recognised trade union where there is one.
• Share an anonymised summary of the views you were given.
• Review the policy at least every three years, with a fresh consultation.

These were due to start in October 2026, and plenty of articles and payroll providers still say “from 1 October 2026”. That date has gone. In July 2026 the government withdrew the revised code it had published in June, after Unite objected that it only asked employers to “merely consult”, and moved the start to “by the end of 2026” (The Morning Advertiser; The Caterer; Pinsent Masons; MCA; Peninsula).

So as of October 2026 the consultation duty is not yet in force, and nobody can tell you the day it starts. The August draft, whose consultation closed on 29 September (Startups.co.uk), makes consulting a required step but treats it as advisory, not binding: you have to ask and listen, but you need not follow a majority view where that would be unfair to a minority. The final code may change that. Expect it to say how to consult and what the summary must contain.

You do not have to wait. Asking staff before you change how tips are shared is already what the current code recommends, and it is far easier to start the habit now than to run your first consultation against a deadline. A staff committee or “tronc council” is one way to do it (UKHospitality).

Tronc and National Insurance

This part is HMRC’s, not the Tipping Act’s, and the 2023 and 2025 changes leave it as it was. It is set out in HMRC’s guidance E24: tips, gratuities, service charges and troncs.

• A tronc is an arrangement for sharing tips, run by a troncmaster: a person other than the employer who decides how the tips are shared.
• Tips paid out through a tronc that the employer has no part in sharing out, directly or indirectly, carry no employer’s or employee’s National Insurance. Income tax is still due, through PAYE.
• If the employer decides who gets what, or the troncmaster is the employer, a partner or a director, the tips are treated as paid by the employer and National Insurance is due.
• The troncmaster normally has a PAYE scheme in their own name, and HMRC is told who they are. They may use the employer’s payroll software, but their records are kept separate from the employer’s.

An independent tronc does not take you outside the Tipping Act. The tips must still be shared fairly, paid on time and written up in the policy and the record. Keep tronc apart from contractual pay, and ask your accountant to confirm your own arrangement.

A checklist for owners and GMs

1. Pass on everything. Every tip and the whole service charge go to staff, with nothing taken off but tax and National Insurance.
2. Write the policy: how tips are taken, who shares them, by what factors, how service charge is treated and when it is paid. Put it where every worker, agency staff included, can read it. Our tipping policy outline lists what to cover.
3. Keep the record of what came in and who got what, for three years, and be ready to give anyone their own part when they ask in writing.
4. Pay on time: by the end of the month after the month the customer paid.
5. Share fairly and consistently, by the factors in the policy, with no group left worse off because of a protected characteristic.
6. Ask your staff now, before you write or change the policy, and keep a note that you did. When the consultation duty starts you will also share an anonymised summary and review the policy every three years.
7. Decide who runs the tronc. If you want the National Insurance saving, it has to be an independent troncmaster who decides the split, with HMRC told.
8. Check the date before you rely on anything about the consultation step, including this page: look for the final code on GOV.UK.

Where Yes Chef fits

Yes Chef makes restaurant management software, so here is what it does about tips today, and what it does not. All of it is on the Tronc page in the web app, under Money; the phone app follows with its next update. How it works, in more detail.

• Sharing out tronc. Each location has its own tips pools, each shared by hours worked, by role weight or by fixed shares. Money in is recorded by kind (card tips, cash tips, service charge), and the till’s tips can be brought in for the week.
• The tips record. Closing a period fixes each person’s share and keeps it; nothing in the app deletes a closed period. It exports as a CSV by period, person or date range, and each worker sees and can download their own part.
• Paid on time. Every period has a pay-by date, with a warning a week before it for whoever runs the tronc.
• The written policy. Start from a template that follows the code, publish it in versions, see who has read it and get reminded before its review date.
• Asking staff. Staff can give anonymous views on a draft, and the app drafts an anonymised summary for you to edit and share. It is not a legal step until the duty starts.
• Tronc apart from pay. The Payroll page shows each person’s tronc in its own column beside their gross pay, and its CSV export carries the two separately, so whoever runs your payroll can treat them differently.

It does not check that your policy is fair, and it is not legal advice. No software makes tronc free of National Insurance either: the app records who your troncmaster is, but that depends on who really decides the split. If your troncmaster is independent, the split is theirs, whoever types it in.

Questions people ask

See how it works, step by step

• Export timesheets for payroll