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

[2B1Gmum]

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.

I was not suggesting that every cash payment means it is not being declared, I certainly wasn't suggesting that the majority of those that get paid in cash are cheating the system. Sorry if it came across that way.

I was self employed for 4 years and didn't earn enough to pay tax but I did declare every penny to HMRC. The company I worked for were advised to record me as a supplier in their accounts by their accountants which is another issue - but they did pay me by BACS, they just didn't want it to look like I was a member of staff and pay my NI or give me holiday pay. I do understand the costs and perils of being self employed, lack of sick pay and holiday pay and I think many companies exploit it by employing contractors to save their costs. But I do know a lot of surprisingly well off families where one person is a personal trainer or hairdresser for example where they clearly don't declare the full amount. I have been in the room when one such person moaned about not being able to borrow four times their income for a mortgage because they only declared two times to HMRC. I wouldn't report them and I chose not to say anything but for anyone who pays their way to hear someone openly declaring that they don't just seems wrong, their were two nurses in the room at the time who were not impressed either.

If you pay someone cash and they are tax avoiders you can be prosecuted, I have a neighbour who worked for HMRC for years and made a point of saying so.

Yes of course go after big tax avoiders but the principle is the same, not paying a fair amount towards the running costs of the country you live in (or have your offices in) is morally wrong. I want more money for the NHS and for schools, I want state pensions to remain available to all who pay the required amount of years towards their National Insurance (btw years caring for your own children count towards NI years, this is not always explained properly but worth knowing). But there is a real chance state pensions will get smaller and be paid even later as successive governments try to find ways to cut costs, either that or put up taxes for all or both.

I do still pay cash for certain things like taxi fares, but there are moves for contactless cards to be used by taxis too. I work in retail and there are still lots of people who prefer cash transactions, equally there are a growing number who pay using their phones and rarely carry cash. Having had a wallet stollen twice I am loath to carry much myself.

No. You didn’t suggest it at all. You outright said it.

I used to get paid in cash but declared it and paid tax and NI

Recently I had quotes in for a building project (quotes were £10k+) and asked all of those quoting for examples of previous work and references. One of them rang me to say his examples and work were under a different name as sole trader but he had recently become a company due to earnings. He then went on to say that made him VAT registered but if I paid in cash he would reduce the bill to remove it.

He did not get the job!

Are you going to post another equally sanctimonious thread about corporations who pay minimal tax. Perhaps they can help "keep our services going" too.

I chose the wrong title, it has been misinterpretated but it was a tag line to catch attention I suppose. I was not trying to stir up a political argument bitoutofpractice - second time of agreeing big corporations should not cheat the system. But tax avoidance is simply that and it is a problem if some people think it is ok for some to commit it and not others. I could name at least 6 people who do so in some shape or form and all are well off and can afford to pay their way - hmrc may or may not catch up with them - but the numbers add up to significant amounts. It is hard and a little awkward to ask people working on your property if they are paying tax and insurance but getting an invoice and receipt is to safeguard for insurance reasons is advisable. If my relatives newly built garden wall collapses the insurance company will not pay out.

I am afraid i am not in a position to do anything about big corporations - that is not the point of my thread.

People have good reasons to ask for cash - one I don't think that has been mentioned is that cheques may bounce.

BACS transfers avoid that problem but perhaps the person does not want to give everyone their bank details (in reality I'm not sure if that's risky but some people perceive it to be) and a pp has explained it may be harder to keep track of who has paid.

Also, would you stand over the client while they carried out the BACS transfer - if not, how can you be certain at the time that they've paid ?

But I do know a lot of surprisingly well off families where one person is a personal trainer or hairdresser for example where they clearly don't declare the full amount. I have been in the room when one such person moaned about not being able to borrow four times their income for a mortgage because they only declared two times to HMRC. I wouldn't report them and I chose not to say anything but for anyone who pays their way to hear someone openly declaring that they don't just seems wrong

^ So you chose not to say anything to them as you were too cowardly to confront them, and therefore took the easier option of coming on here to accuse anyone and everyone else of whom you have no idea of their working practice. Nice.

OP to a certain extent I agree with you, once you factor in all the invisible hours a s/e person has in their working week. However it is unacceptable for you to sanctimoniously preach to us about our behaviour when you know at least six people who HMRC may or may not catch up with. If you feel so strongly report them and then preach to us, don’t expect us to live by standards you are not meeting yourself.

DH is self- employed in one of the jobs mentioned upthread. He charges by the hour, and yes that’s a lot, but he doesn’t work every hour of every day, he has a lot of travelling time as he goes to all of his clients. Some people pay him by bank transfer, some cheques (but very few these days) and some cash. He banks the cheques, sometimes keeps the cash as cash but declares all of it because a) it’s illegal not to and b) mortgages, loans, credit rating, pension etc. He pays tax and NI.

Occasionally someone will get sniffy with him and say they don’t pay in cash on principle (not that he asks them to) and he is happy to tell them that it's all declared, no matter how it comes. It’s up to him whether he actually banks it or not. When we took out our mortgage last year, the broker used a combination of bank statements and tax returns to assess his income and affordability.

All these people who say they “never” pay cash for anything make me wonder how they buy a paper or a Mars bar , or is the corner shop somehow different?

From what I can see your only basis for claiming people who are paid cash are avoiding tax is that you have seen a few people who are self employed who are successful and doing well for themselves?

Lets not think about:
how hard they must have worked
that if they get sick they don't get paid,
they don't get holidays
the staff they have to pay to have holidays AND sick
if they don't get paid by customers its time consuming ergo costly to claim money back
that if they don't get work in, they don't get paid
they need a high day rate to cover the days they aren't working, plus marketing, admin and all other elements that come with running a business

There are SO many risks to being self employed that the gains SHOULD be massive if they succeed, otherwise what is the point?
Lets not think someone has overcome much difficulty, done a great job and succeeded? No, lets treat them like common thieves and say they only reason they have money is because of tax avoidance.

Reasons for cash payments:
Ease for customer, Especially small amounts
Credit card charges are crippling - these can't be passed on anymore
Rural location card machines don't work
cost of card machines
lets not forget of course, it's legal currency!

Nasty, narrow minded and goady opening post and disingenuous follow up.

People are generally happy to pay the proper amount but of tax and avoid jail if it is reasonable to do so. But the government starts taxing earnerings way bellow the level of a liveable income-why? All of the money that is taxed from low earners is returned to them anyway-the vast majority of households are net recipients of the tax system. The government taxes too much and spends even more. They should be focusing on limiting access without payment to state services for those who can afford to pay their own way and use the savings to increase the tax free threshold instead of hunting down and prosecuting cleaners and handymen.

EggsonHeads

I would probably scrap most mandatory taxes and replace them with a use tax.

Replace car tax with toll roads. Etc, that way tax funds are targeted on services that people want.

I think the OP is Dianne Abbott or Jeremy Corbyn.

Well meaning, but totally impractical and unrealistic.

I agree with you about tax evasion, but it's not your fault if the person paying you cash is doing so because they aren't going through their books.
We are paid in cash quite often and there's no difference to being paid any other way.
I collect it up every month or sooner if a large amount and take it to the bank.
If other people are avoiding paying their tax, that's up to them.
Quite often people will want to pay us cash believing that they'll get it cheaper, or they are also making money from the work but aren't claiming they are.
Let them get on with it, they'll get caught out one day.

no idea why we have a Government announcement on here

but

re the point on pensions - I am 42 and have always thought the state pension won't exist by the time I get there.

I find your insinuation that everyone who asks to be paid in cash is avoiding tax quite offensive, tbh.

Why should I mind if my cleaner earns £25,000 pa? I doubt that they do - most cleaners I know do it around caring commitments - usually childcare which limits number of hours worked pretty dramatically.

I often get paid in cash. I fill in my self assessment truthfully. It wouldn't be worth the risk to lie (and I have no reason to) I value my business and income too much.

I think the OP is Dianne Abbott or Jeremy Corbyn.

Well meaning, but totally impractical and unrealistic.

Sounds more like our current government tbh

@OliviaStabler agree on that