Have you paid ‘cash-in-hand’?

August 09, 2012, 11:54 AM GMT+0

75% Brits say paying cash ‘not wrong’ – 64% admit paying tradespeople in cash, while 30% haven't

Three quarters of Britons say that there is nothing wrong with paying tradespeople 'cash-in-hand', our poll shows, with over three fifths saying that they have paid ‘cash-in-hand’ before.

Paying workers ‘cash-in-hand’ is often disparaged because it can be seen as a means of tax avoidance – but only a quarter of Brits have used the payment method knowing it was done to avoid tax intentionally, our poll shows.

  • 75% of Britons say it is not wrong to pay a tradesman ‘cash-in-hand’ while 15% say that it is wrong
  • 64% have paid a tradesman ‘cash-in-hand’ while 30% say they have never done so
  • 26% of those who have paid a tradesman ‘cash-in-hand’ did so knowing that he or she intended to avoid paying tax on it, while 60% say they have not ever done this
  • 30% claim they have specifically asked a tradesman for a discount if they pay ‘cash-in-hand’ while 62% say they have not

It is alleged that those who receive payment 'cash-in-hand' could avoid paying VAT and income tax by 'neglecting' to list the job on their books. Having said this, just over half of Britons say that it's wrong to pay a tradesman ‘cash-in-hand’ when aware that they intended to avoid paying tax.

Cash discounts

Just over a third think it is wrong to ask to pay cash in order to get a discount for the job.

  • 57% say it is wrong to pay a tradesman ‘cash-in-hand’ knowing that he or she intends to avoid paying tax on it, while 29% say this is not wrong
  • 36% think it is wrong to specifically ask a tradesman for a discount if you pay ‘cash-in-hand’ while 52% say it is not wrong

There is no law against paying someone in cash, but those who do receive cash payments are under a legal obligation to disclose their earnings to HMRC and say whether they are liable for income tax or VAT.

‘Morally wrong’ or only option?

Treasury minister David Gauke sparked controversy recently after criticising homeowners who give workers such as tradesmen and cleaners ‘cash-in-hand’ payments.

"I think it is morally wrong. It is illegal for the plumber but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash," he said. Gauke claimed that the action is a large part of the hidden economy in which the Government loses about £2 billion each year while damaging the worker’s own individual rights.

Some tradesmen have responded to Gauke’s comments, claiming that his accusations do little to help tradesmen who are already struggling in a difficult economic climate, and highlighting that there is little or no alternative to cash payments for many workers who may face a loss of pay altogether without cash payments. Tradesman Tariq Dag Khan said: "criticising the whole industry belies a misunderstanding of the situation many customers and tradesmen are in.”

Mr Gauke later told BBC Two's Newsnight there was nothing wrong with paying in cash, but rather doing so with the purpose of avoiding tax was wrong.

Since Gauke’s comment, senior cabinet ministers including PM David Cameron, Nick Clegg and George Osborne have admitted that they have paid traders ‘cash-in-hand’ in the past.

See the survey details and full results here (page 8)