There is a lot of worry about this online but to be clear; they don’t give a damn how you spend your money. All they care about is any undeclared income, or undeclared capital.
If you have a review, they may question some of your spending or withdrawals. But there isnt a wrong answer. You can be gambling it away and they won’t care. They’re only really mean to ask about incoming money but if you are asked about the cash withdrawals, just tell them it’s for your shopping for the month. It doesn’t matter. I think maybe they’re checking that you’re not being extorted or anything but I don’t know.
To put you at ease, I’ve recently started my own business. For the first year, it was mostly cash only. I wasn’t online yet; I just did markets all around Scotland. I had a card machine but half of the places I did in the highlands had such poor signal that I just took cash and everyone knew to bring cash so it wasn’t an issue. I’d say around 65% of my business in the first year was cash.
I didn’t deposit to my bank account as I just used it for living costs, but I kept all receipts and kept a detailed spreadsheet of every single sale. Also used cash when I purchased anything for the business in a shop rather than online so that went into the spreadsheet and receipt files.
The only money I had incoming to my bank account was a £235 payment from a friend I loaned money to years ago (back when I had the money!).
I get a small UC top up. After a year, I had a UC review. They wanted to see all my bank accounts. Now, my business was half cash. So my bank accounts wouldn’t show a match up to the income figures I’d given UC. I sent them all my bank accounts, the file with all the photos of incoming and outgoing receipts and my spreadsheet. During my review, the guy went through my personal accounts and asked about the £235, that was fine and allowed, no problem at all. He asked about any bank transfers I’d done and that was all fine. Then when it came to my business accounts he said, “You’ve sent me a handy spreadsheet with notes for everything and the recipes so we don’t have any questions about the business side.”
They didn’t care at all that it was cash based; I accounted for everything.
I had been really worried about it but it was the simplest and easiest thing.
In summary 😂; don’t worry about using cash. If I can have my business in half cash then you can withdraw your cash as they can see the full trail of where that money came from. They don’t care. Just be ready to answer if they ask.