The 1 October tipping rule did not happen. Use the delay to protect the £5,400 your tronc saves you

If someone told you that from 1 October you had to consult your staff before changing how tips are shared, they were reading the original timetable. It slipped. The government pulled its draft code of practice in July, ran a second consultation that closed on 29 September, and now says the new duty will land "by the end of 2026". Nothing about how you split tips changed on 1 October. One thing did: a worker now has six months, not twelve, to take a complaint about your written tips policy to a tribunal. So you have a few weeks, maybe a couple of months, before the consultation rule arrives. This page is about spending them well, because the real money in this is not the tribunal cap. It is the employer National Insurance you do not pay on tips that go through a proper tronc, and a badly run consultation is one of the easier ways to lose it.

What is actually law today

Since 1 October 2024 the rules under the Employment (Allocation of Tips) Act 2023 have applied. You must pass every qualifying tip and service charge to your workers in full, by the end of the month after the customer paid it, with no deductions except tax. If tips come in more than occasionally, you must have a written tipping policy, show it to all staff, and keep a record of every tip and who got it for three years. The statutory code says you should consult staff. It does not make you.

Section 14 of the Employment Rights Act 2025 changes that last part. Once it is switched on, you must consult before you write your first tipping policy, review the policy at least once every three years, consult again at every review, and give all staff at that site a written, anonymised summary of what came out of the consultation. If you recognise a union you consult its reps; if you have elected worker reps you consult them; a typical cafe has neither, so you consult the staff directly.

As at 13 October 2026, legislation.gov.uk still shows section 14 as "not in force". No commencement regulations have been made for it.

How the date slipped

The timetable the government published with the Act said October 2026. Here is what happened instead:

• 5 February to 1 April 2026: first public consultation on the new duty and on updating the code.
• 29 June 2026: government response published. A revised code was laid before Parliament.
• July 2026: that code was withdrawn. The GOV.UK page now says it was pulled "so that a new public consultation can be held on its content", and tells you to keep following the existing 2024 code in the meantime.
• 19 August to 29 September 2026: second consultation, on a redrafted code.
• 25 September 2026: the government's implementation timeline was updated. Tipping now reads "by the end of 2026".

The government response spells out the order of events from here: consider the responses, lay a final code, get parliamentary approval, then make commencement regulations. That chain does not fit inside a fortnight, so if you have not started, you have not missed anything yet.

The one tipping change that did arrive on 1 October

A worker who thinks you have broken the written-policy or records rules complains to a tribunal under section 27N of the Employment Rights Act 1996. From 1 October 2026 the time limit for that complaint is six months from the failure, down from twelve. The failure to consult will sit inside the same section when it arrives, so the same six-month clock will apply to it.

If the tribunal agrees with the worker it can order you to fix the policy and can award up to £5,366 per worker for financial loss. That figure was £5,000 when the Act was written, which is why most write-ups still quote £5,000; it was uprated on 6 April 2026.

Read that cap for what it is. A worker has to show a financial loss caused by your failure to consult. For a cafe with six staff and a tips policy that was never explained to anyone, the plausible claim is not six times £5,366. It is one disgruntled leaver, a few hundred pounds, and a morning you would rather have spent anywhere else. The cap is a nuisance number. The next section is the real one.

Who decides the split is a £5,400 question

HMRC does not care how fair your tips policy is. It cares who allocates the money. Its guidance for employers (E24) is plain: a tip paid out of a tronc is free of National Insurance only if it is "not paid, directly or indirectly, to the employee by the employer" and is "not allocated, directly or indirectly, to the employee by the employer". Both conditions, every time. If you, the owner, decide who gets what, National Insurance is due on every pound.

A tronc, if the word is new to you, is simply a pool of tips run by someone other than the employer, the troncmaster, who decides how it is shared and runs it through a separate PAYE scheme. Income tax is paid either way. The saving is National Insurance.

Put it on a number. Say your cafe takes £3,000 a month in card tips and service charge, £36,000 a year, and all of your staff already earn above the £5,000 secondary threshold.

• Owner allocates, paid through payroll: employer National Insurance at 15% is £5,400 a year, out of your profit. Your staff also lose 8% employee National Insurance, £2,880 a year between them, on top of income tax.
• Independent tronc, both HMRC conditions met: employer National Insurance £0. Staff pay income tax only.

Same tips, same customers. The difference is which name is on the allocation decision. For a cafe keeping ten pence in the pound, £5,400 of profit is £54,000 of sales you would otherwise need to find.

Consulting without becoming the allocator

This is where the new duty and the old tax rule rub against each other. The Act will make you consult staff on the policy. The policy, by law, must say how tips are allocated. If the consultation ends with you announcing the split, you have just allocated the tips, and HMRC's second condition is gone.

There is a line HMRC itself draws. Its National Insurance manual says that where the employer "decides who can benefit from payments made by an independently run tronc, but cannot decide how much they can benefit by", the exemption still holds. So you can set the frame. You cannot set the amounts.

Three ways to run a consultation that stays on the right side of that line:

• Consult on the frame, not the figures. Which payments count as tips. Which roles are in the pool (kitchen, floor, bar, the weekend student). The principles, such as hours worked or seniority, that the policy says will be weighed. Leave the percentages and the weekly sums to the troncmaster.
• Let the troncmaster run the meeting on allocation. The draft code says the troncmaster can be a member of staff you appoint, a member of staff the team elects, or an outside payroll firm. Whoever it is, they front the part of the conversation about how much each role gets, and the written summary records that you did not.
• Write the record for two readers. The anonymised summary the Act requires goes to staff. Keep a second note in the file for HMRC: who was consulted, what you asked, what the troncmaster decided, and the date. The draft code says a majority vote should not be the default, because the biggest group of workers (front of house, nearly always) would outvote the kitchen. A short written note that minority roles were heard is cheap insurance against both a fairness complaint and a tax argument.

If you have no tronc at all and simply share card tips on payroll by your own rule, none of this applies to you yet, and you are paying the £5,400. Setting up a tronc is a bigger decision than this page, but the arithmetic above is the reason to have the conversation with your accountant before the consultation duty makes you write the policy down in front of your staff.

What is still open

The code is a draft. The second consultation closed on 29 September and the government has not published its response. The draft adds a few things worth knowing now: it discourages fixed or guaranteed tip sums for named roles, says consultation should be "proportionate to the size, complexity and nature of the business", and promises worked examples for small employers in separate non-statutory guidance that does not exist yet. Any of that could move before the final version is laid.

Northern Ireland is outside all of this. The tipping law is reserved for England, Wales and Scotland.

The bit a buyer will look at

When you sell, the buyer's accountant will ask how tips are taxed. A tronc that meets both HMRC conditions is a documented, recurring saving that transfers with the business and sits inside the profit figure the price is built on. A tips scheme where the owner quietly decides the split is a National Insurance exposure going back years, and that comes off the price in due diligence or lands as a warranty you give. Running the consultation properly, with the troncmaster visibly in charge of allocation and a dated record, is how you turn the first into something you can prove and avoid being the second.