cash in hand work london

Cash In Hand Work – How Tax Works On It?

Are you thinking of accepting cash in hand work as a payment option? If yes, then you might be wondering about the tax implications.

First, you need to know that the exact implications are based on your personal situation ( whether you are self-employed, a student, or have employment).

In this blog, you will know what is cash in hand work and what to do in the most common circumstances? So, let’s dig into the details!

Cash In Hand Work

 

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What is Cash In Hand Work?

In it, the employer pays you in cash rather than adding you to payroll or depositing it into your bank account. So, it tends to be short-term contracts with your employer.

Your employer can pay you in any form. It’s not illegal to be paid in cash. But, you are required to report your income to HM Revenue & Customs if there is a tax to pay by both your employer and you.

When individuals are employed, they get a payslip that contains a tax code and gross earnings. So, by this, their employer knows how much national insurance and income tax to subtract.

 

Do you have to Inform HMRC about your Cash in Hand Work?

When you earn more than £1,000, you have to inform HM Revenue & Customs about your income. You can benefit from the trading income allowance below this limit. 

It allows the taxpayers of the United Kingdom to earn below £1,000 during a tax year. However, you have to maintain a log of your income in order to prove that you are not making above this limit.

 

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How to Tell HMRC about Cash in Hand Jobs?

In order to tell HMRC, first, decide whether you have casual earnings or are self-employed. Self-employed implies that you’re in it for the long term in order to build a steady income, while casual implies that what you’re doing is a one-off.

 

1) Declaring Cash in Hand If you’re Self-Employed

You must register with HM Revenue & Customs and disclose your earnings every year. This must be done in the self-employment section. First, you must declare your business income and costs there. Then you must pay a tax as per it.

 

2) Declaring Casual Income to HMRC

When you earn more than £1,000, you must declare it to HMRC by completing a Self Assessment form. Whether you are self-employed or have casual income, your registration with HMRC is completed once you receive a UTR number. So, please keep track of this number because you’ll need it to manage your taxes.

 

Conclusion

Now that you know what is cash in hand work. We’ll wrap up our blog by stating that getting paid in cash is not illegal. You can earn up to £1,000 without informing HMRC under the trading allowance laws, but once you earn more than that, you must register with HMRC; otherwise, you’ll face penalties.

 

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Disclaimer: This blog contains general information about cash in hand.

 

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