Tronc system and NI contributions

arciere

Company ABC operates in the restaurant industry. Such restaurants operate a 'voluntary service charge' policy, by which a fixed percentage is added to each bill automatically but the amount can be removed upon request before paying the bill.
Said company pays its employees a fixed salary. A percentage of this fixed salary is paid with the money coming from service charges through a Tronc system, with the Troncmaster being a person from the company's accounts department. It does this so that, after taxes, the salary earned by the employee will be the same, but the company will be saving a percentage as NI is not paid for the amount coming from the service charge (apologies but I didn't know how to make it clearer).

Is this all legal from an HMRC perspective?

calcotti

I can’t see that your question has anything to do with welfare benefits and Tax Credits so this may not be the best place to post your query.

arciere

calcotti wrote: »

I can’t see that your question has anything to do with welfare benefits and Tax Credits so this may not be the best place to post your query.

Apologies, is there any section of the forum more suitable?

calcotti

arciere wrote: »

Apologies, is there any section of the forum more suitable?

No need to apologise, I was just concerned that those of us who frequent this forum may not be the best people to answer your question. There isn’t an obvious place but perhaps the Employment forum is more appropriate.

antrobus

arciere wrote: »

Company ABC operates in the restaurant industry. Such restaurants operate a 'voluntary service charge' policy, by which a fixed percentage is added to each bill automatically but the amount can be removed upon request before paying the bill.
Said company pays its employees a fixed salary. A percentage of this fixed salary is paid with the money coming from service charges through a Tronc system, with the Troncmaster being a person from the company's accounts department. It does this so that, after taxes, the salary earned by the employee will be the same, but the company will be saving a percentage as NI is not paid for the amount coming from the service charge (apologies but I didn't know how to make it clearer).

Is this all legal from an HMRC perspective?

HMRC guidance
https://www.gov.uk/guidance/employee-gets-tips-gratuities-or-service-charges-through-a-tronc