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Anne T
Anne T, Accounts & Tax
Category: UK Tax
Satisfied Customers: 151
Experience:  ACCA, ATT
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If you get a job and the wage is cash in hand how do you pay

Resolved Question:

If you get a job and the wage is cash in hand how do you pay tax?
Submitted: 2 years ago.
Category: UK Tax
Expert:  Anne T replied 2 years ago.
If you are earning more than £102 per week, your employer should be declaring your income to HMRC and paying over any tax and National Insurance due on your behalf. Alternatively, you need to contact HMRC on 0845(NNN) NNN-NNNNand they will send you out a tax return to complete each year and you will be liable to pay any tax due on your earnings. HMRC should also send you a National Insurance liability notice dependent upon your level of earnings.

Even if your earnings are low, you should provide your employer with a completed form P46, as, if this is a second job for you, he has to deduct tax at basic rate unless he receives a coding notice from HMRC telling him otherwise. This form can be found here:

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?formid=760&record=LQJdkolplsk

Being paid cash in hand is not a problem as long as you are receiving a payslip detailing the amounts you are being paid and any tax and national insurance that has been deducted from this.
Customer: replied 2 years ago.

Do you have to receive a payslip for cash in hand from an employer?

If they are paying cash in hand do they have to pay tax and national insurance on your behalf.

Would it be better to go self employed and declare your wage that way?

Expert:  Anne T replied 2 years ago.
Yes, you do have to receive a payslip for cash in hand from an employer. How you are paid doesn't matter. The payslip is the proof that it has been declared to HMRC by the employer. They also need to pay tax and National Insurance on your behalf if it is due, they cannot pass this obligation on to you.
You could go self-employed, which would mean that you are responsible for paying your own tax and National Insurance. If you do this, any invoices you raise must show your National Insurance No. and/or Unique Taxpayer Reference (HMRC will give you a 10 digit UTR once you are registered with them as self-employed. If you wish to register as self-employed, you can do this through their website, but you must do it within 3 months of starting self-employment, or they will charge you a £100 penalty.
Customer: replied 2 years ago.

When you go self employed would you then have to give your employers a weekly/ monthly invoice for your services?

Is it against the law to pay someone cash in hand and not declare it with HMRC and if so is there a penalty?

If as an employee you declare your wage without a payslip is this acceptable?

Expert:  Anne T replied 2 years ago.
If you go self-employed, you need to provide invoices for your services, which they would then pay.
Payment can be made without running a PAYE scheme if the person being paid receives less than £102 per week and has no other income. If payments are more than this, a PAYE scheme should be run in order to pay over any tax or National Insurance due to HMRC. A penalty may be levied by HMRC, but it is very dependent upon the circumstances.
An employee should always receive a payslip no matter how much money they earn, but most of the time you would not necessarily need to have a payslip to be able to declare your wages.
Customer: replied 2 years ago.

How do you declare the amount you earn if it differs from week to week?

In simple terms - do you just contact the tax office telling them the amount you have earnt for the week and they then send a demand for tax/national insurance etc...

How can they be sure the amount you are disclosing is correct without a pay slip?

Expert:  Anne T replied 2 years ago.
You would declare the amount earnt for the tax year in one lump sum on a tax return, rather than do it week by week.
The only way they can be sure is to open an enquiry into your employer and ask to see his records showing how much you are being paid, at which point, they may ask him to run a PAYE Scheme instead.
It would be much easier for you if your employer ran a PAYE Scheme and gave you a weekly payslip. Most accountants would run this service for him for not a lot of money.
Customer: replied 2 years ago.

So it is a guesstimate of earnings and having declared the amount you think you will earn How do you then pay tax - do they work it out on a monthly rate and you set up a direct debit?

 

If you have been out of the system not working or claiming do you have to account for the lost years?

Expert:  Anne T replied 2 years ago.
The next tax return to be issued will cover the tax year running from 6th April 2011 to 5th April 2012. You will need to include on that the amount you earned during that time. You then have to submit the tax return to HMRC before 31st January 2013. You will be due to pay any tax due on that income by 31st January 2013.

Payment is made on an annual basis, rather than weekly or monthly.

You will not normally be asked to account for any lost years.
Anne T, Accounts & Tax
Category: UK Tax
Satisfied Customers: 151
Experience: ACCA, ATT
Anne T and 3 other UK Tax Specialists are ready to help you

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