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Why you should not pay anyone in cash .....

(57 Posts)
2B1Gmum Thu 01-Feb-18 12:30:03

I will start by turning this on its head and saying that it is not a good thing for the recipient to be paid in cash and not declare it for the following reasons: if they do not fill in proper tax returns and register for national insurance they will not be entitled to any state pension; if they wish to buy a property a mortgage company will need proof of income in order to loan an amount that on paper they can afford it - this applies to any loan, and finally if found out it is not just a fine, HMRC can demand up to 7 years lost tax and they could be put in prison and have a criminal record .

Why you should not pay cash is also multi faceted, knowingly paying someone who is avoiding tax is a criminal offence; not having an invoice and receipt for work would mean any insurance claims as a result of shoddy workmanship, broken property etc. would be invalid and finally think about the fact that for every £10 that person is paid £2 at least should (after reaching minimum tax free income) be going to the government who needs it to pay doctors, nurses, paramedics, teachers, headteachers, social workers etc. If this or any future government feels taxes aren't bringing in enough they will eventually put up taxes for all those who do pay their fare share by PAYE or honest tax returns.

Finally I urge you to think about the hourly rates that some self employed 'cash only' workers are charging and work out what their annual income is. Recently a relative of mine paid someone a days work to add a foot in height to a garden wall - I said I hope you didn't pay cash and was told well he wouldn't have done it if not - at his daily rate, even allowing for holidays, he would have banked a six figure (cash) income. More than most doctors, more than nurses, more than teachers, in fact three or four times the national average salary. Think about your payslip, look at the deductions for tax, NI, pension contributions and see what your hourly rate is. Where I live cleaners charge around £12 an hour, that is close to £25,000 a year if they worked five mornings and afternoons a week - if they took it all as cash it is the equivalent of earning near to £29,000 a year. A loss of £4000 towards running the country. Please make sure everybody pays their fare share of tax to keep our services going, our hospitals running our schools able to afford classroom assistants (who incidentally earn on average just under £8 an hour ).

Ask for a receipt and or an invoice and ask to pay direct into a bank account.

squishysquirmy Thu 01-Feb-18 12:43:29

I agree with you about tax evasion being A BAD THING, but...

Your maths about how much cleaners etc make is off - are you including the time spent travelling between houses etc? To assume that a builder is making a certain daily/hourly rate all day every day is also wrong - generally those running small businesses spend a fair bit of time looking for business, contacting potential/previous customers, and doing administrative "behind the scenes" work. The rate they charge for the work you see them doing also has to pay for the work you don't see.

eg, my dd's ballet teacher makes a seemingly huge sum per hour if you go by what each child pays for an hours lesson. If you extrapolated that into a full time wage and ignored her costs, she'd be bloody loaded. But that would be a ridiculous extrapolation - she does not make that amount every hour she is working on her business, just the hours that she is teaching.

Also, ALL businesses charge what the market is willing to pay. If your relative thought the price charged by the builder was such a rip off, he could have built the wall himself. But he decided that he'd rather pay someone else to do the work (fair enough) and so has to accept their rates.

theunsure Thu 01-Feb-18 12:59:06

I pay all sorts of people in cash - doesn't mean they don't declare it.

In the horse world there are loads of cash transactions but I can assure you that my livery yard owner, farrier, riding instructor, equine dentist, saddle fitter, equine chiropractor etc all pay their tax and NI.

You can run a proper business and still take cash payments!

But am very happy to pay my cleaner in cash, what she does or doesn't do with it is her business, not mine. I don't expect she does declare it but that's her concern. it's not my job to police the behaviour of others.

OliviaStabler Thu 01-Feb-18 13:05:15

Says someone who had never been on the breadline

brownelephant Thu 01-Feb-18 13:12:13

I never pay in cash.

I also would add, that if you were to work in a bribe prone environment and you were audited, regular cash payments to a cleaner (as example) without good documentation (contract, invoice, receipt) could be rather painful for all concerned.

CatsCatsCats11 Thu 01-Feb-18 13:18:26

Bit offensive to those of us who have a legitimate business where the majority is cashed, but is all declared with the relevant people.

wavesandwellies Thu 01-Feb-18 13:23:12

as above posters said, just because someone accepts cash payments does not mean that they aren't declaring it. there is usually A LOT of behind the scenes work that goes on that the "daily/hourly rate" will also cover.

these people also have bills of their own to pay. so it would be in their interest to declare it and bank it.

don't get me wrong I'm sure there are plenty that don't but I wouldn't go as far as to say never pay cash.

Marcine Thu 01-Feb-18 13:23:50

A cleaner charging £12 an hour is unlikely to be working 40 solid hours a week - they will be working in 2 or 3 hour blocks that might not fit neatly together with travelling time in between. They are also paying for their supplies, insurance, car, sick pay and holiday out of that.

CoolCarrie Thu 01-Feb-18 13:29:05

OP you should be more concerned about the big businesses not paying their taxes, than the window cleaner getting paid cash in hand

feellikeanalien Thu 01-Feb-18 16:04:28

OP are you Philip Hammond?

UnimaginativeUsername Thu 01-Feb-18 16:07:56

If I pay my yoga teacher in cash, it’s really her responsibility to make sure she does her taxes correctly. It’s much more convenient for her to have us put money in the pot than to pay by bank transfer, as it makes it harder for her to keep track of who has paid what.

Mrsderekshepard Thu 01-Feb-18 16:08:07

What about people who have never worked a day in their lives!?!?

honeysucklejasmine Thu 01-Feb-18 16:33:35

When I was self employed I charged £35 p/h. But the nature of my job meant in a good week I could do a max of about 20 hours. In a bad week, or when a client had moved on and hadn't been replaced yet, maybe only 4. So over the course of the year, I didn't actually earn enough to pay tax.

squishysquirmy Thu 01-Feb-18 17:11:48

"What about people who have never worked a day in their lives!?!?"

Like children.
They're the worst for it!
grin

BrieAndChilli Thu 01-Feb-18 17:22:22

Most of the people you have mentioned will have the following costs before they take any money Home

Advertising costs
Consumable Materials (cleaning supplies or nails and wood etc)
Equipment (hoovers or tools etc)
Transport costs - petrol, extra insurance and wear and tear on the vehicle)
Cost of accountant possibly if they don’t want to do thier tax return themselves
Holiday/ sickpay, they will have to set aside some money for this

Kursk Thu 01-Feb-18 17:27:59

I pay using whatever method is requested by the person. If the plumber wants cash, I give him cash.

His finances are his business nothing to do with me. If he chooses to evade tax then that’s his choice.

Frouby Thu 01-Feb-18 17:34:50

Yeah. Until amazon and starbucks etc pay their corporation tax I will pay my hairdresser, the blokes that clean my car, my mechanic and my farrier in cash.

If they don't declare it they don't declare it. They will probably pay enough tax when they spend it, rent business premises, pay for materials and put fuel in their work vehicles to cover it. And the lousy sick pay, no paid holidays, no compassionate leave, no flexi time etc will probably make it all equal to a PAYE employee.

MrsPestilence Thu 01-Feb-18 17:36:27

Your imaginary cleaner works 40 hours per week, has no expenses, no travelling time and no holidays shock

Please don't start your own business, you have no clue.

Pay by any means you want, most people really don't mind.

Ifartrainbowsandglitter Thu 01-Feb-18 17:41:53

Such a patronising post.

I used to be a cleaner and I can assure you I declared every penny of my income and paid tax and national insurance.

How dare you make such an unjust assumption.

PatchworkGirl Thu 01-Feb-18 17:55:44

Please don't assume that everyone is out the cheat the system. I used to get paid in cash (sometimes cheque) in one of my self employed 'roles' and I declared the lot. Would have been equally happy with bank transfer but cash was easier for most people.

Having said that, I would be very wary about hiring/paying anyone who insisted on cash, or gave me any other reason to doubt their honesty, and would probably look elsewhere.

And be careful about making assumptions based on hourly rate. Don't forget that self employed people spend time finding work/prepping/travelling and pay all expenses from this rate.

StereophonicallyChallenged Thu 01-Feb-18 18:11:59

Banks charge business accounts for both deposits and withdrawals. Even electronic transactions. Means that plenty of small business owners prefer cash as it cuts out the charges. A builder taking cash will probably spend the previous jobs cash received on the materials for this job iyswim.
Then there are the traditional types where the customer base still mainly prefers cash, so taxi's, cafes, hairdressers, ice cream vans, market traders, takeaway shops & many domestic trades. There are literally millions of small transactions in cash made in this country every single day.

And just because a business is all on-line and documented doesn't mean they are paying tax properly either amazon confused

Rumpledfaceskin Thu 01-Feb-18 18:15:26

I work at events (private parties and weddings) and it’s really the only way to pay numerous staff on a one off basis. A self employed worker getting paid in cash would be foolish not to declare for the reasons you stated, NI, pensions etc.

BitOutOfPractice Thu 01-Feb-18 18:16:44

Paying someone in cash doesn't necessarily mean they are evading tax hmm

pastabakewithcheese Thu 01-Feb-18 18:18:06

Jobsworthbiscuit

glenthebattleostrich Thu 01-Feb-18 18:18:21

I'm a childminder. I accept payment by cash, bank transfer, vouchers and PayPal.

I've just done my tax return and paid all my tax and NI due. I put every penny through my accounts, issuing invoices for every hour I have children in the house.

Getting paid in cash means I don't either give up a bit of my weekend to get money out for kids activities through the week (toddlers, soft plays, crafts etc) or drag 3 toddlers out of our way in the cold to get cash.

Every self employed person I know is scrupulous about their accounts, it's part of the job.

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