Category: National Insurance

Tronc Guidance

A summary of new rules for Tronc.

Summary

  • Coming in force from 1st October 2024
  • All tips (without any kind of deduction) to be passed to workers (agency workers included) by end of following month.
  • Businesses required to have a written tipping policy to ensure fairness and transparency.
  • Code or Act does not affect taxation of tips.
  • Cash tips (if no control exercised by employer) are out of scope of Tipping Act and Code.
  • Tips will be distributed in the restaurant where collected. One restaurant’s tips cannot be paid to staff of other restaurant.

Tipping policy – Factors to Consider

Businesses need to prepare and distribute the tipping policy to all staff members including agency workers. Tipping policy needs to inform staff the basis of tips allocation. Basis can be on several factors, see example list below:

a. Type of role/work e.g. distribution between front of house and backroom workers

b. Basic pay (and how workers are engaged)

c. Hours worked during period when tips are received

d. Individual and/or team performance

e. Seniority/level of responsibility

f. Length of time served with the employer

g. Customer intention

Employers should consult with workers to seek broad agreement in the workplace that the system of allocation of tips is fair, reasonable and clear.

Records

Workers can ask for past 3 years records. Employer will need to provide total tips collected during their employment and amount allocated to the worker making the request but not the specific amounts paid to other workers.

If a worker does not wish to participate in Tronc, Tronc master should get this in writing.

Action:

Restaurants should start preparing a written Tronc policy.

National Insurance is weekly or monthly but not yearly

Directors National Insurance

April 2017

My client took a new employee who had worked for two months with another employer before joining him.

My client will employ this individual for a couple of months paying say £1000 per month.

After taking the last employer’s pay and current projected pay this individual’s earning was below Personal Allowance limit of £10,600 (Tax year 2015 -2016)

When I ran the payroll , HMRC Basic PAYE tool asked me to deduct Class 1 National Insurance from this employee’s pay.

I was confused as I calculated that this employee’s total pay in the whole tax year will be less than Primary Threshold of £672 x 12 = £8,064

I had been calculating National Insurance contribution like Income Tax and taking the National insurance thresholds to be same as Income Tax Threshold.

I researched and once again Chartered Institute of Tax Advisor’s(CIOT) website came to rescue. It informed me that national insurance thresholds are calculated on a weekly or monthly basis (depending on the payment cycle) unlike Income Tax where thresholds are calculated on a yearly basis.

Example of Hypothetical Emily was most illuminating. Visit the below mentioned page and

Ctrl + F “Emily” to find the example.

Link to the article : http://www.taxguideforstudents.org.uk/tax-essentials/what-is-national-insurance

Thank you CIOT

March 2019

Recently my colleague Neel took another client where the director was appointed during the financial year. He was processing his one salary payment as £8,424 the NIC threshold for financial year 2018-19 but tax softwares were asking him to deduct NICs. We tried in two different software same result.

We searched on the internet and came across another helpful guide by HMRC CA44. It reminded us that like employees , directors appointed mid way through the year will have their NIC threshold pro rated.