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Christmas is the busiest time of year and there is plenty of additional work available if you are looking to earn some extra cash with lots of businesses searching for some short term help.
You may be offered cash in hand work, which may sound tempting but here are 5 things things you should know before you accept cash in hand work this Christmas:
1 All Your Earnings Need to be Reported to HMRC
Failing to report your earnings to HMRC is against the law. If you work for someone it is their responsibility to report what they pay you to HMRC through the payroll system. If you earn money in cash then it becomes your responsibility to report what you have earned to HMRC yourself, regardless of whether you need to pay tax on it or not.
Everyone has to pay tax on their earnings, however there is an amount you can earn before you pay tax called Personal Allowance. This is currently set at £11,500 until 5 April 2018 when it will be changed. Even if you are earn money below this threshold you must report everything you earn to HMRC and failure to do so can result in penalties to you and the person who has paid you cash in hand.
2 You Must Receive a Payslip from Your Employer
Whether your employer choose to pay you by bank transfer, cheque or cash they must always provide you with a payslip. This payslip should detail how much you were paid and how much tax and national insurance was deducted from your pay.
If your employer does not provide you with a payslip, you must ask for one, it is their responsibility by law to give you one.
3 You have no employment rights
When you are paid cash in hand you lose your rights to statutory benefits such as national minimum wage, pensions, sick pay, notice period or holiday pay.
Keep your job on the books because if your situation changes you may find yourself needing sick pay to get you through.
4 You will have Unreported Income
If you are considering getting a loan or mortgage, your cash in hand work will not be included as part of your income when working out how much you can borrow. Your declared income is what matters to the lender.
5 You Don’t Have to Accept Cash in Hand
If you feel you are not comfortable with an arrangement being offered to you, just walk away. There are plenty of job opportunities for temporary work over the christmas period, where you will be paid correctly.
If you feel your employer is not playing by the tax and national insurance rules, then you can report them to HMRC here.
Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.