Whichever way you agree to be paid does not affect your liability for paying tax and NIC on your earnings. Can your employer pay you in cash? How do you know if your employer is making deductions and forwarding them to HMRC?
Employees must receive a payslip each time they are paid, even if paid in cash. This is a legal obligation of your employer.
They flash a knowing smile and quickly walk away after pocketing the cash. But why the secrecy? However, there are a few conditions you should be aware of. You will also need to understand exactly what take-home pay actually means. In essence, take-home pay is exactly what it sounds like. It is the amount of money your employees take home following a job, after deductions like tax and National Insurance NI , regardless of how you pay them.
This avoidance of taxes is the illegal part, not the cash-in-hand approach. First of all, your employees need to agree to receiving their net income cash-in-hand, and consent that they completely understand the difference between their take-home pay and their gross income.
The easiest way to outline these differences is to provide them with a payslip outlining how much they earned, how much was paid to HMRC in taxes and NI contributions, and how much is left for them to take home. Cash tips are income. If you receive cash tips, you must declare them on your tax return — regardless of how you receive them.
It makes no difference if tips come from your employer or direct from customers. You may share tips between employees that come from a collection by all workers like in a tip jar. What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme?
What if I have a tax credits overpayment? Working through a limited company What is the national minimum wage? How do I work out my tax? How is tax collected on taxable state benefits? How do I check my coding notice? What tax do I pay on redundancy payments? Termination payments on leaving the armed forces Employment benefits and expenses What are benefits-in-kind? What payments and benefits are non taxable? What if I incur expenses in relation to my job? What travel expenses can I claim?
What if I use my own car for business purposes? Payroll giving Allowances and expenses paid to armed forces personnel and deductions from their income Pensions and employees What is automatic enrolment for employees? What National Insurance do I pay as an employee? How do I repay my student loan? What if I do not pay enough tax? What if I pay too much tax? What if I work abroad temporarily?
What if I am in the armed forces and work overseas?
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