Tronc schemes - Deducting a handling fee

[tylerdurdan1]

My understanding of tronc schemes (for sharing tips among staff) was that if the employer deducted an 'admin' fee for processing the tax on the tips, handling fee etc that this was deemed to be influencing the allocation of the tips and therefore did not meet the criteria to be NI exempt? i.e. NI was due on all of the tips unless the employer gave the staff 100% of the tips without an 'admin' fee.

However, reading the latest HMRC update I took away that an admin fee was ok. An employer could deduct a % of the total tips and then the balance is shared among the staff and this still meets the criteria to be NI exempt???

[RAL]

If employer is distributing the tips then, he has to operate paye and all the tips should go through the payroll deduct paye and nic on tips payments.