Paying tradesman cash in hand?

[Richtea67]

Hi all, our builder has offered a £500 discount on some work (£4000 instead or £4500), if we pay cash. I normally prefer the security of paying via bank transfer, but we're on a budget and this discount would make a massive difference. The builder seems legit, we've had recommendations and have gone to view previous jobs, checked out companies house details etc. The work comes with 5 year guarantee. Does this sound OK? Or would you be wary?

So you’d be happy to pay a carpet fitter or plasterer a days wage in cash but not other trades…. Why is that? If you say you abhor tax evaders why are you ok paying some trades in cash but not to others?

I wouldn't do this.

Cash in hand for a really small task under £100 fine, but for bigger jobs you need a paper trail. Just not worth the risk for £500.

Other peoples tax affairs are none of my business but I would want a receipt and confirmation I had paid along with any of the normal guarantees

Unless your paying by credit card you won’t have a 100 percent guarantee
and even credit cards have a time limit to action any potential charge back

I’ve paid in cash for most tradies
but only when the job is done

NOT condoning this, but you could suggest 50/50 if you want a half-way-house where you get some paperwork and some discount. My parents do this all the time, routinely on big scale jobs (£5k-£20k).

As long as you get paperwork for the 5 year guarantee, then I would do it and save £ 500

I pay cash and still get an invoice 🤷🏻‍♀️

You don't know many rich people personally do you, if you believe that 😆

I do actually. Professional knowledge.

DH is a lawyer, so we always have invoices for everything. I think it's the right way to proceed whoever you are really

Yes. Always get a paper trail.

Well the can't be very clever, all the ones I know absolutely cheat the system

@Limehawkmoth plasterers and carpet fitters in my area are certainly not on minimum wage!!

Well shop them. I would.

I find it annoying. They earn too much already, they can pay bloody tax

I wouldn't. You might find your work done in bits and pieces 'out of hours' ie. time like Saturday mornings that doesn't go through the accounts. Probably fine for a small job, but a bigger one can stretch.

No that would be stupid. And not even a discount really. I'm happy to pay cash for small jobs, building work in 4 figures? No way. I'd rather pay the extra £500

You can check to see if he is VAT registered. We were quoted for roof work including VAT but when we checked he was obviously inflating his price and keeping the "VAT"

You can keep a paper trail while paying cash. There ARE legitimate ways to do this. If the tradesperson is in effect only taking their wage from you, and you pay cash so they can purchase materials etc with your cash, so all they’re charging you for (in effect) is labour, they may well be keeping themselves below the VAT threshold (which is around £80k annually I think).

If they will give an invoice for the work they’ve done and the receipts for the materials, then paying cash is a sensible way of avoiding paying unnecessary tax. If they’re charging you a job rate and they’re padding the materials expenses, well then VAT is what they have to pay. I have done this for many types of building works- I speak to the people involved and ensure that I’m buying all materials so they’re only supplying me labour, and then they remain below VAT threshold and we all save money.

So long as I got all the necessary paperwork I'd 100% do it.

You've got to take the savings where you can get them these days to be honest.

They won't be giving you an invoice for a 'cash discount' so you'll have no warranty afterwards. Not that builders' guarantees are worth much sometimes anyway.

I’m se. I rarely get paid in cash but even if I do I still give an invoice or a receipt via email

There are very few trades that would get away without being VAT registered these days unless you bought all the materials yourself rather than them supplying? The threshold is so low compared to a year's earnings + parts.

On a £4k piece of work, the VAT would actually be £800, so offering a £500 discount suggests your tradey is actually pretty sharp and would still declare £1,500 of work done to HMRC & pay £300 VAT over, but keep the rest off the books.

Doing it this way means he could keep his diary the same, but just under declare - reducing what is paid from his work to support the NHS/teaching assistants in classrooms/pensions for the elderly or other things people generally agree are 'good' spending of tax money', and also potentially less money to support his children if he's separated.

OR of course, he could not be declaring it at all & just pocketing the £300 difference for himself?

Or maybe it's the benefit of the doubt situation & he'll give you a full VAT invoice & declare £3,333.33 of work done of £4k invoice, hand over the VAT correctly, and just wants it in cash so he can disappear down the bookie/boozer/ladies on the street corner & it doesn't hit his bank account to be used on family expenses?

Your call OP whether any of those make you feel a £500 discount to you is a good thing?

It would be very risky with a contractor you don’t really know, or have used before. Could cost you dearly if you have problems with the work in the future.

If he hasn’t already started, I’d be looking for a new builder.