What if I am paid in cash?
As an employee, you may be paid in cash. However, this does not affect whether you are liable to tax and NIC on your earnings. We explain this further below.
Can my employer pay me in cash?
Your employer is allowed to pay you in cash, providing that they take off the right amount of income tax and National Insurance contributions (NIC) under Pay As You Earn (PAYE), and hand this over to HM Revenue & Customs (HMRC) before paying you what is left.
Most employers in the UK now pay their employees by bank transfer, although some employers continue to pay in cash.
Should I receive a payslip?
You should always receive a payslip each time you are paid, even if you are paid in cash. This a legal obligation of your employer.
The payslip shows all your pay, income tax and NIC for the pay period. It should also show a PAYE reference and how you will be paid, for example, in cash, by cheque or directly to your bank.
The payslip can be a paper form or in electronic form, for example a PDF file.
There is more information on payslips on GOV.UK.
Why is my employer paying me in cash and not giving me a payslip?
It is possible that an employer may wish to pay their employees in cash so that they can try to avoid their obligations under PAYE (deducting tax, NIC and paying employers’ NIC). They may not pay over any income tax and NIC to HMRC, to save money – this is illegal.
It is important to be aware of the following:
- If your employer fails to meet their obligations under PAYE, HMRC can demand the income tax and NIC from you at a later date in certain circumstances.
- If your employer does not pay over NIC to HMRC for you, you may lose out on state benefits.
It is likely that your employer will not provide you with payslips if they are trying to avoid their obligations under PAYE.
If your employer does not give you a payslip each payday, you should ask for one. There is an example payslip in the resources section.
What should I do if I think my employer is acting illegally?
You should report your employer to HMRC. You can find more information on GOV.UK.
What if I am self-employed?
'Cash in hand' payments for work are like any other income – you must declare them to HMRC in your annual Self Assessment tax return.