Accountants for Hospitality: Tronc, VAT & the Business Rates Change Most Guides Still Get Wrong

Restaurants, pubs, cafés and hotels run on thinner margins and faster-moving numbers than almost any other sector — daily sales, weekly cost swings, and a payroll built around tips, service charges, and a largely young, often part-time workforce. Two things changed the financial picture for hospitality businesses substantially in the past two years: the Tipping Act 2024 rewrote how tips must be handled, and business rates relief for the sector was fundamentally restructured from April 2026 — a change a surprising number of accountants, and even some published guides, haven’t fully caught up with yet.

This guide covers what a specialist accountant for hospitality actually does, the 2026 business rates overhaul, tronc and tips under current rules, and VAT specifics that catch hospitality businesses out.

Quick Answer

An accountant for hospitality handles VAT across a genuinely complex menu of rates (hot versus cold, eat-in versus takeaway), payroll built around a tronc scheme for tips, and — as of 2026 — a business rates position that’s changed structurally. The temporary 40% Retail, Hospitality and Leisure relief ended on 31 March 2026 and has been replaced by permanently lower business rates multipliers for qualifying properties under £500,000 rateable value, alongside a new 15% relief specifically for pubs and live music venues. A properly run, independent tronc scheme can also save employer and employee National Insurance on tips entirely. Fees typically run £400–£700 a month for a single venue, more for multi-site operators.

Key Takeaways

• The 40% Retail, Hospitality and Leisure business rates relief ended on 31 March 2026 — most existing guides still describe it as current, but it’s been replaced.
• From 1 April 2026, permanently lower business rates multipliers apply to qualifying RHL properties under £500,000 rateable value, with no cash cap — unlike the relief scheme it replaced.
• A new 15% business rates relief specifically for pubs and live music venues applies for 2026/27, on top of the general RHL multiplier.
• Since the Tipping Act 2024 (1 October 2024), 100% of tips must reach staff, with a written tipping policy and record-keeping mandatory.
• A properly structured, independent tronc scheme can remove employer National Insurance (13.8%) and employee NI entirely from qualifying tip payments.
• Typical fees run £400–£700 a month for a single hospitality venue, scaling up for multi-site operations.

Table of Contents

1. What Does an Accountant for Hospitality Actually Do?
2. Business Rates: The 2026 Change Most Guides Still Get Wrong
3. Tronc & Tips: The Tipping Act 2024 Explained
4. VAT for Hospitality: Hot, Cold, Eat-In and Takeaway
5. Payroll and Minimum Wage in Hospitality
6. Capital Allowances on Fit-Outs and Refurbishment
7. Hospitality Businesses in London: What We See
8. A Worked Example: Tronc Savings and Business Rates Combined
9. How Much Does It Cost?
10. Common Mistakes People Make
11. Accountant Insights: What We See in Practice
12. Do You Need a Specialist Accountant? (Decision Framework)
13. General Accountant vs Hospitality Specialist
14. Checklists
15. FAQs
16. Sources
17. Final Thoughts

What Does an Accountant for Hospitality Actually Do?

Beyond standard accounts, a specialist manages daily sales and cash reconciliation, sets up and oversees a compliant tronc scheme, applies VAT correctly across a mixed menu of hot food, cold food, alcohol, and takeaway sales, checks business rates relief and multiplier eligibility (an area that’s just changed structurally), and handles payroll for a workforce that often includes casual, part-time, and under-21 staff on different minimum wage bands.

Business Rates: The 2026 Change Most Guides Still Get Wrong

This is the update most hospitality accounting guidance hasn’t caught up with. For 2025/26, eligible retail, hospitality, and leisure (RHL) properties received a temporary 40% business rates relief, capped at £110,000 per business — a scheme that had been rolled over annually, at varying rates, since the pandemic. That temporary relief ended on 31 March 2026.

From 1 April 2026, it’s been replaced by a fundamentally different structure: permanently lower business rates multipliers, set 5p below the standard national multiplier, apply automatically to qualifying RHL properties with a rateable value under £500,000 — with no cash cap, meaning every qualifying property benefits regardless of size, unlike the old capped relief scheme. Properties with a rateable value of £500,000 or more instead use a higher-value multiplier. Alongside this, a new 15% relief applies specifically to eligible pubs and live music venues for 2026/27, on top of the general RHL multiplier reduction. Transitional relief caps also apply where a property’s 2026 revaluation has significantly increased its rateable value, tapering in over 2026/27, 2027/28, and 2028/29.

The practical upshot: your 2026/27 business rates bill can differ from 2025/26 for several overlapping reasons — a new multiplier, a revalued rateable value, transitional relief, and (for pubs and live music venues) an additional specific relief — which makes checking the bill line by line, rather than assuming it simply continues the old 40% relief, genuinely worthwhile this year.

Tronc & Tips: The Tipping Act 2024 Explained

Since 1 October 2024, the Tipping Act 2024 has required that 100% of tips, gratuities, and service charges reach staff, with no deductions beyond statutory ones (Income Tax and, where applicable, NI). Every hospitality employer collecting tips must have a written tipping policy available to staff and keep records of tips received and distributed for at least three years.

A tronc is the formal mechanism most venues use to meet this requirement — a pooling and distribution arrangement run by a troncmaster, who cannot be the business owner. Where the troncmaster genuinely and independently controls how tips are allocated (rather than the employer directing it in practice), HMRC treats the distribution as falling outside employer National Insurance entirely — a saving of 13.8% for the employer and roughly 12% for the employee on qualifying tip payments, on top of meeting the legal requirement. Getting the independence genuinely right matters: a tronc where the owner still effectively controls allocation doesn’t qualify for the NI exemption, regardless of what it’s called.

VAT for Hospitality: Hot, Cold, Eat-In and Takeaway

Hospitality VAT (HMRC’s VAT Notice 709/1) varies by exactly how an item is sold, not just what it is. The same sandwich can be zero-rated cold and taken away, or standard-rated hot and eaten in — and certain categories (alcoholic drinks, confectionery, crisps and savoury snacks, soft drinks, and anything genuinely hot) are always standard-rated regardless of eat-in or takeaway status. Getting this coded correctly at the point of sale matters, since HMRC audits regularly flag miscategorised VAT as one of the most common issues in hospitality — a POS system set up correctly from the start avoids a much larger correction exercise later.

Payroll and Minimum Wage in Hospitality

Hospitality payroll typically spans several National Minimum Wage bands at once — under-18, 18-20, and 21-and-over rates commonly apply within the same team — alongside variable hours and, often, a tronc scheme running in parallel to standard payroll. Crucially, tips can never be used to make up National Minimum Wage or National Living Wage pay; basic wages must independently reach the legal minimum, with tips distributed on top.

Capital Allowances on Fit-Outs and Refurbishment

Kitchen equipment, refrigeration, bar fittings, and much of a venue’s fit-out qualifies for capital allowances, often through the Annual Investment Allowance or Full Expensing, allowing the cost to be deducted in full against profit in the year of purchase rather than spread over several years. This is one of the more commonly under-claimed reliefs in hospitality, particularly around a refurbishment or new site opening, where the total spend is substantial but often not broken down carefully enough to identify everything that qualifies.

Hospitality Businesses in London: What We See

London is home to more than 11,400 restaurants alone, concentrated heavily in central and business-heavy areas like Westminster, Camden, and Tower Hamlets, and the sector here carries the UK’s highest median hospitality salary at £30,100 — reflecting the capital’s steeper cost base across rent, wages, and business rates alike. That combination means London hospitality businesses have proportionally more to gain from getting tronc structuring and business rates relief right, and proportionally more to lose from getting them wrong, than venues facing a lower cost base elsewhere in the UK.

With the 2026 business rates changes affecting properties differently depending on rateable value — and London’s higher property values meaning many venues sit closer to, or above, the £500,000 threshold where the standard RHL multiplier stops applying — checking your specific 2026/27 bill individually matters more here than in most of the country.

A Worked Example: Tronc Savings and Business Rates Combined

Illustrative Example: Say a restaurant with 10 front-of-house staff collects £50,000 in card tips over a year. Run through an independent tronc rather than as employer-controlled payments, employer National Insurance of 13.8% is removed entirely from that £50,000 — a straightforward £6,900 annual saving for the business, on top of staff correctly receiving 100% of tips as the Tipping Act requires.

Illustrative Example: The same venue, with a rateable value of £45,000, previously received 40% RHL relief in 2025/26. From 2026/27, that relief has ended, replaced by the new lower RHL multiplier applying automatically to its bill instead — a different calculation entirely, and one that needs checking against the actual 2026/27 demand rather than assumed to simply continue at a similar level. Combined, the tronc restructuring and a proper review of the new business rates position can easily represent a five-figure annual difference for a single mid-sized venue.

How Much Does It Cost?

Common Mistakes People Make

1. Assuming the old 40% business rates relief still applies
Why it happens: The scheme has been rolled over annually for several years, making it easy to assume it continues unchanged.
Consequence: An incorrect budget assumption for 2026/27, since the relief ended and was replaced by a different multiplier structure.
How to avoid it: Review your actual 2026/27 business rates bill line by line rather than assuming continuity.

2. Running a tronc the owner still effectively controls
Why it happens: It’s tempting to keep informal oversight of tip allocation.
Consequence: Losing the National Insurance exemption entirely, since HMRC requires genuine troncmaster independence.
How to avoid it: Ensure the troncmaster — not the business owner — genuinely controls allocation decisions.

3. Miscoding VAT on mixed hot/cold and eat-in/takeaway sales
Why it happens: The same item can carry different VAT treatment depending on exactly how it’s sold.
Consequence: Under- or over-charging VAT, a common trigger for HMRC audit queries in hospitality.
How to avoid it: Set up POS categorisation correctly from the outset, reviewed periodically as the menu changes.

4. Using tips to top up minimum wage shortfalls
Why it happens: It can seem logical if total pay (wages plus tips) clears the minimum threshold.
Consequence: A National Minimum Wage compliance breach, since tips can never count toward it regardless of total pay.
How to avoid it: Ensure base wages independently meet minimum wage requirements before any tips are added.

5. Under-claiming capital allowances on fit-outs
Why it happens: A refurbishment invoice often isn’t broken down carefully enough to separate qualifying items.
Consequence: Spreading relief over several years instead of claiming it in full immediately.
How to avoid it: Have significant refurbishment costs itemised and reviewed for Full Expensing or AIA eligibility.

Accountant Insights: What We See in Practice

• The 2026 business rates change is, in our experience, still poorly understood by hospitality operators — many are budgeting on the assumption last year’s 40% relief simply continues.
• Independent tronc structuring is one of the highest-value, most consistently under-implemented changes we make for hospitality clients — the NI saving is immediate and ongoing.
• London venues carrying higher rateable values benefit disproportionately from a proper individual review of their 2026/27 multiplier position, given how close many sit to the £500,000 threshold.
• VAT miscoding at the point of sale is the single most common issue we find when taking on a new hospitality client, usually inherited from an earlier, incorrectly configured POS setup.
• Pubs and live music venues that haven’t checked their new 2026/27-specific 15% relief are leaving money unclaimed that a general business rates review might miss.

Do You Need a Specialist Accountant?

Step 1: Review your 2026/27 business rates bill in detail. Don’t assume last year’s relief simply continues.

Step 2: Check your tronc scheme’s genuine independence. Confirm the troncmaster, not the owner, controls allocation.

Step 3: Audit your VAT coding. Confirm hot/cold and eat-in/takeaway categorisation is accurate at the POS level.

Step 4: Flag recent fit-out or refurbishment spend. Check capital allowances eligibility separately from routine expenses.

Step 5: Choose based on genuine hospitality-sector experience. Tronc, hospitality VAT, and 2026 business rates all need specialist, current knowledge.

General Accountant vs Hospitality Specialist

Checklists

Checklist 1: Business Rates & Compliance

• ✓ Review your actual 2026/27 business rates bill against the new multiplier rules
• ✓ Check pub/live music venue eligibility for the additional 15% relief
• ✓ Confirm your written tipping policy is current and accessible to staff
• ✓ Keep tip records for at least three years

Checklist 2: VAT & Payroll

• ✓ Audit POS VAT categorisation for hot/cold and eat-in/takeaway items
• ✓ Confirm minimum wage compliance excludes tips entirely
• ✓ Verify troncmaster independence for NI exemption purposes
• ✓ Flag fit-out or refurbishment spend for capital allowances review

FAQs

Has business rates relief for hospitality changed in 2026?
Yes — the temporary 40% Retail, Hospitality and Leisure relief ended on 31 March 2026, replaced from 1 April 2026 by permanently lower business rates multipliers for qualifying properties under £500,000, plus a new 15% relief for pubs and live music venues.

What is a tronc scheme?
A formal arrangement for pooling and distributing tips, gratuities, and service charges among staff, run by an independent troncmaster who cannot be the business owner.

Does a tronc scheme save money?
Yes — where the troncmaster genuinely and independently controls allocation, qualifying tip payments fall outside employer and employee National Insurance entirely.

Can tips count toward minimum wage?
No. Tips can never be used to make up National Minimum Wage or National Living Wage pay — base wages must independently meet the legal minimum.

How does VAT work for restaurants and cafés?
It varies by exactly how an item is sold — hot versus cold, eat-in versus takeaway — with certain categories like alcohol and confectionery always standard-rated regardless.

What happened to the 40% business rates relief for hospitality?
It was a temporary scheme that ended on 31 March 2026, replaced by a permanent, uncapped lower-multiplier system for qualifying properties from April 2026 onward.

Can I claim capital allowances on a restaurant refurbishment?
Yes, generally — kitchen equipment, fittings, and much of a fit-out can qualify for full, immediate relief through the Annual Investment Allowance or Full Expensing.

How much does an accountant for a hospitality business cost?
Typically £400–£700 a month for a single venue with staff and VAT registration, with tronc administration often priced separately.

Do pubs get any additional business rates relief?
Yes — a specific 15% relief applies to eligible pubs and live music venues for 2026/27, on top of the general RHL multiplier reduction.

Who can be a troncmaster?
Any staff member or independent third party, but never the business owner — genuine independence from the employer is required for the NI exemption to apply.

Sources

• GOV.UK — Business Rates Relief: Retail, Hospitality and Leisure scheme
• GOV.UK — Business rates multipliers: qualifying Retail, Hospitality or Leisure properties
• GOV.UK — Tipping Act 2024 and tronc scheme guidance
• HMRC — VAT Notice 709/1: catering and takeaway food
• GOV.UK — National Minimum Wage and tips

Business rates multipliers, reliefs, and VAT rules are set by HMRC and local authorities and subject to change — always confirm your specific 2026/27 bill and current figures on GOV.UK before relying on them.

Final Thoughts

Hospitality accounting has changed substantially in the past two years — the Tipping Act reshaped how tips must be handled, and business rates relief for the sector has been fundamentally restructured from April 2026, replacing the temporary 40% relief most operators had grown used to. A specialist accountant for hospitality should be tracking both properly, not leaving a venue to discover the difference on next year’s bill.

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