{"id":1644,"date":"2022-01-11T04:35:41","date_gmt":"2022-01-11T04:35:41","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1644"},"modified":"2026-03-31T22:59:33","modified_gmt":"2026-03-31T21:59:33","slug":"pay-cash-in-hand","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/employment\/pay-cash-in-hand\/","title":{"rendered":"Is It Legal to Pay Employees Cash in Hand in the UK?"},"content":{"rendered":"\n<p>Cash-in-hand payments are legal, but compliance is non-negotiable. Employers who pay staff in cash must meet the same tax and reporting obligations as those using any other payment method. This article explores the path of compliance for employers considering or currently using cash payments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is Paying Cash in Hand?<\/h2>\n\n\n\n<p>Paying your employees cash in hand is often called guaranteed take-home pay. Essentially, you are paying your employees their take-home pay after you have deducted any Income Tax and National Insurance Contributions in cash.<\/p>\n\n\n\n<p>It is important to note that you can only pay your employees cash in hand if they agree to you doing so. They must be clear on what this means and understand what:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>their gross income is in comparison to their take-home pay;<\/li>\n\n\n\n<li>the process if they are due a tax refund; and<\/li>\n\n\n\n<li>the amount you will base any legal entitlements on, such as sick pay.<br><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What are My Responsibilities When I Pay My Employees Cash in Hand?<\/h2>\n\n\n\n<p>As an employer choosing to pay your employees cash in hand, you assume many responsibilities. For example, you are responsible for ensuring that your employees know <a href=\"https:\/\/legalvision.co.uk\/employment\/employment-rights\/\">their legal rights<\/a> before you pay them in cash. Furthermore, you must not mislead your employees. For instance, you must not persuade them that they should not apply for benefits such as tax credits as they get cash-in-hand payments. This could be deemed to be illegal.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Furthermore, you are legally responsible for correctly deducting and paying any income tax or national insurance contributions due on their payments. You should do this the way you usually do for other employees. Therefore, your employee\u2019s cash-in-hand pay is their net pay rather than their gross pay.<\/p>\n<\/div>\n\n\n\n<p>In addition, you are responsible for ensuring that your employees receive all they are legally entitled to, which can be associated with pay, such as sick leave and holiday pay.<\/p>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>Key Statistics:<\/p>\n<ol>\n<li><strong data-start=\"161\" data-end=\"178\">\u00a319.3 billion:<\/strong> The total cash receipts from Income Tax, Capital Gains Tax, and National Insurance contributions in the UK for April to August 2025, underscoring the importance of accurate tax reporting.<\/li>\n<li><strong data-start=\"409\" data-end=\"425\">30.2 million:<\/strong> The number of payrolled employees in the UK as of May 2025, highlighting the prevalence of formal employment arrangements.<\/li>\n<li><strong data-start=\"316\" data-end=\"323\">66%:<\/strong> The percentage of hidden economy activities conducted without any records, indicating a significant lack of documentation in informal employment arrangements.<\/li>\n<\/ol>\n<!-- wp:paragraph {\"fontSize\":\"small\"} -->\n<p class=\"has-small-font-size\">Sources:<\/p>\n<!-- \/wp:paragraph --> <!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item {\"fontSize\":\"small\"} --><\/p>\n<li class=\"has-small-font-size\">HM Revenue &amp; Customs, <em>HMRC Tax Receipts and National Insurance Contributions for the UK: New Monthly Bulletin<\/em>, September 2025.<\/li>\n<!-- \/wp:list-item --> <!-- wp:list-item {\"fontSize\":\"small\"} -->\n<li class=\"has-small-font-size\">Office for National Statistics, <em>Earnings and Employment from Pay As You Earn Real Time Information, UK: June 2025<\/em>, June 2025.<\/li>\n<!-- \/wp:list-item --> <!-- wp:list-item {\"fontSize\":\"small\"} -->\n<li class=\"has-small-font-size\">HM Revenue &amp; Customs, <em>The Hidden Economy in the United Kingdom &#8211; Wave 2 (2022)<\/em>, June 2023.<\/li>\n<p><!-- \/wp:list-item --><\/ol>\n<p><!-- \/wp:list --><\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Payslips<\/h3>\n\n\n\n<p>You are also legally required to ensure your employees <a href=\"https:\/\/legalvision.co.uk\/employment\/payslip-england-wales\/\">receive a payslip<\/a> each time you pay them. This must include:<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td>\n<p><b>Gross Pay<\/b><\/p>\n<\/td><td>\n<p><span style=\"font-weight: 400\">This is your employee&#8217;s total pay before any deductions are due.<\/span><\/p>\n<\/td><\/tr><tr><td>\n<p><b>Net Pay&nbsp;<\/b><\/p>\n<\/td><td> <p><span style=\"font-weight: 400\">This is your employee&#8217;s pay after you have made deductions.<\/span><\/p> <\/td><\/tr><tr><td>\n<p><b>Variable Deductions&nbsp;<\/b><\/p>\n<\/td><td><p><span style=\"font-weight: 400\">This is made to their gross pay, such as tax, student loan, pension contributions and national insurance.<\/span><\/p><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The payslip should also provide other information such as the hours the employee worked, their tax code, or the duration of time the payslip refers to.<\/p>\n\n\n\n<p>When paying your employees cash in hand, you must still ensure they receive the <a href=\"https:\/\/legalvision.co.uk\/employment\/national-minimum-wage\/\">National Minimum Wage<\/a> applicable to them.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2025\/01\/21011453\/Screenshot-2025-01-21-at-12.14.38-pm.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">2025 Key UK Employment Law Changes<\/div>\n            <div class=\"body-text\">\n                <p>This factsheet outlines key developments in 2025 affecting workforce management. In particular, the proposed Employment Rights Bill (2024) will drive significant changes, anticipated to start late 2025.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2025\/01\/22052013\/LegalVision_2025-Key-UK-Employment-Law-Changes-Factsheet.pdf\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<p>You must also report to HMRC that you are making payments to an employee as cash in hand, free of tax. Moreover, you should do this when completing your Full Payment Submission (FPS) and through your final submission at the end of the year. Guidance on reporting your payroll information to HMRC can be found <a href=\"https:\/\/www.gov.uk\/guidance\/what-payroll-information-to-report-to-hmrc\">here<\/a>.<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex 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Firstly, you must get an agreement from your employees before doing so. Furthermore, paying your employees cash in hand creates extra responsibility for you, as you must ensure that you make the relevant income tax and national insurance contributions for your employees <em>before<\/em> passing them their cash-in-hand salary as their net pay. You must also make sure that your employees correctly receive other employment benefits they are entitled to, such as holiday pay. A failure to do so could lead to serious consequences.<\/p>\n\n\n\n<p>LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced <strong><a href=\"https:\/\/legalvision.co.uk\/employment-lawyers-lp\/\">employment lawyers<\/a><\/strong> help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or <a href=\"https:\/\/legalvision.com.au\/membership\/\" target=\"_blank\" rel=\"noreferrer noopener\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1743959174978\"><strong class=\"schema-faq-question\"><strong>What are the potential risks of paying employees cash in hand?<\/strong><\/strong> <p class=\"schema-faq-answer\">The main risks include inadvertently failing to comply with tax regulations and difficulty in proving payment in case of disputes. Other risks include increased scrutiny from HMRC, and potential penalties if proper procedures are not followed.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1743959221553\"><strong class=\"schema-faq-question\"><strong>Do I need to provide payslips when paying cash in hand?<\/strong><\/strong> <p class=\"schema-faq-answer\">Regardless of the payment method, you are legally required to provide itemised payslips to your employees. These should detail gross pay, deductions, and net pay.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1774994210806\"><strong class=\"schema-faq-question\">Can employers pay cash in hand without employee consent?<\/strong> <p class=\"schema-faq-answer\">No. Employees must agree to cash-in-hand payments and understand their gross pay, tax refund processes, and how it affects entitlements like sick pay.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1774994226741\"><strong class=\"schema-faq-question\">Must employers report cash-in-hand payments to HMRC?<\/strong> <p class=\"schema-faq-answer\">Yes. Employers must report these payments via the Full Payment Submission (FPS) and the final year-end submission.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/1644\" \/>            <input value=\"https:\/\/legalvision.co.uk\/employment\/pay-cash-in-hand\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Is It Legal to Pay Employees Cash in Hand in the UK?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Cash-in-hand payments are legal, but compliance is non-negotiable. Employers who pay staff in cash must meet the same tax and reporting obligations as those using any other payment method. This article explores the path of compliance for employers considering or currently using cash payments. What is Paying Cash in Hand? Paying your employees cash in<a href=\"https:\/\/legalvision.co.uk\/employment\/pay-cash-in-hand\/\">Continue reading <span class=\"sr-only\">&#8220;Is It Legal to Pay Employees Cash in Hand in the UK?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13480,"featured_media":576,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"2755,866,2133,2819,2195,1055","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[35],"tags":[20,21,219,333],"class_list":["post-1644","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","tag-small-business","tag-medium-business","tag-employment-law","tag-cash-in-hand"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is It Legal to Pay Employees in Cash in Hand? | LegalVision UK<\/title>\n<meta name=\"description\" content=\"In England and Wales, it is legal to pay your employees\u2019 salaries as cash in hand. 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