COVID-19: What support is there for people paid in cash?

I was paid cash in hand – was this wrong?

It is perfectly acceptable to be paid cash in hand if things are properly reported to HMRC where required. It depends on how you were working (for instance, whether you were employed or self-employed) and whether, if you were employed, the person or company you were working for was operating Pay As You Earn (PAYE), even though they then paid you in cash.

We give an overview of being paid cash in hand in our migrants section.

Note that this article does not in any way condone tax evasion – whether employed or self-employed, earnings paid to you or income earned by you should always be reported to HMRC properly, as we explain in the relevant sections of our website.

However, the reality is that this might not always happen – for example, because a minority of employers try to avoid their responsibilities to operate PAYE.

Also, in some cases, there is no need for employers to report payments to HMRC under PAYE. This can apply to employers who pay someone less than £120 a week and that person does not have another job or source of pension income and is not provided with any benefits in kind. This might apply in the case of domestic workers, say a cleaner who does a few hours a week for just one family. Or, for example, au pairs who live in with a family and may not be entitled to the national minimum wage.

If you are in one of these situations and the coronavirus pandemic means that your work has reduced or stopped altogether, you might be worried about what support you can get.

Am I eligible for the government’s coronavirus support schemes?

Employer operated PAYE

If you were paid cash but your employer operated PAYE and you were on the payroll at 19 March 2020, your employer might be able to continue paying you some of your wages even if you are not currently working (if you have been ‘furloughed’).

This support is given via the Coronavirus Job Retention Scheme, which means your employer can claim a grant to help them pay you part of your wages (usually 80%).

Cash earnings included in Self Assessment tax returns

If you have been operating a self-employed business and taking cash for jobs, you usually should have been declaring this income to HMRC on your Self Assessment tax returns each year.

If you were doing so, and filed a tax return for the 2018/19 tax year by 23 April 2020, are continuing to trade and meet the other conditions you may be eligible for a government grant under the Coronavirus Self-Employment Income Support Scheme.

Neither of the above situations apply

You might still be eligible to claim welfare benefits, for example universal credit – we explain more below.

Can I claim sick pay or other welfare benefits?

To qualify for statutory sick pay (SSP) you must be classed as an employee and have done some work for your employer and earn an average of at least £120 per week as well as meeting some other conditions. Getting paid cash in hand does not stop you from being entitled to sick pay as long as you are still employed, your employer was operating PAYE on your earnings and you meet the other relevant conditions.

There are other benefits you might be able to claim if you are no longer working or you are not entitled to statutory sick pay and are ill: ‘New style’ Jobseekers Allowance and ‘new style’ Employment and Support Allowance, for example. However, these rely on a certain level of national contributions having been made. You may not have paid enough national insurance contributions (or have not claimed or been awarded sufficient national insurance credits) to be eligible for state benefits, to the extent that these rely on past contributions.

But for those on a low income, ‘means-tested’ benefits might be available. These types of benefit don't rely on whether you have paid any NIC and instead, look at how much income you have (and often savings as well) and calculate whether you are entitled to welfare support either in full or to top up your income to a certain level. You can get means-tested benefits by themselves or sometimes as a top-up to contribution-based benefits.

The main means-tested benefit is now universal credit (UC). For those who have reached their state pension qualifying age (or both claimants in a joint claim have reached their state pension qualifying age), it is pension credit.

UC is gradually replacing six other benefits: working tax credit, child tax credit, housing benefit, income support, income-related employment and support allowance and income-based Jobseeker’s Allowance. The majority of people can no longer make claims to these other benefits, although there are two exceptions. Instead, if you need financial support you will need to claim UC.

⚠️ Warning: If you are already getting any of the benefits that UC is replacing you must seek advice before making a claim for UC. Any UC claim will cause those other benefits to stop immediately and you may not be able to claim them again.

You should also be aware of the following:

• If you or your partner get or have recently received a severe disability premium in certain benefits, or are classed as a ‘frontier worker’, you may be able to make a claim for one of the benefits that UC is replacing. This includes income-based Jobseeker’s Allowance. See our information in the main part of our website. This is complex and you should seek advice BEFORE making any UC claim if you think this might apply to you.
• UC takes into savings and your partner’s circumstances and income. If their income is too high, you may not qualify for any help.
• If your partner receives contribution-based ESA – which was the old name for new-style ESA – you may be able to ask for it to be re-assessed to include an income-based element to top-up your income instead of claiming UC. If you are in this situation, you should seek advice.

The benefits system is complicated. If any of the points above apply or you are unsure, you should seek specialist welfare rights advice before making any UC claim.

The Department for Work and Pensions (DWP) administers UC and, for people who are employed, they usually use information about wages that employers report to HMRC in the previous month. So, if you are still being paid cash in hand (or received wages in the month before your UC claim) you will need to check with your employer whether they report your wages to HMRC and if they don’t, you will need to tell DWP about your wages. Your claim is based on what support you need now, rather than what may have happened in the past although DWP may ask you about previous earnings to help them decide whether the benefit cap applies.

Claims for UC are usually made online and you will need to prove your identity to make the claim, but there are lots of ways you can do this. You might need to explain what has been happening with your income when you are contacted by the Department for Work and Pensions DWP about your claim to the extent it is relevant to your work capability, claimant commitment and so on.

Where can I find more information or get help?

You can use one of the following online calculators to get an idea about what you may be entitled to:

• Entitled To
• Turn 2 Us
• Policy in Practice

If you are already claiming any of the following: tax credits, housing benefit, income support, income-based jobseekers allowance and/or income-related employment and support allowance, you should be aware that making a claim for UC will mean your existing awards will be terminated.

Our Getting Help page gives details of organisations which can help with welfare rights advice, such as Citizens Advice and Advicelocal. We recommend that you take advice on your own situation before you make a new claim.