Did you know, you risk losing your employment rights and some benefits if you accept your weekly / monthly salary “cash in hand”?
As an employed nanny, you may, from time to time, come across an employer who suggests they pay you in cash. While this is perfectly legal, it becomes illegal, if this method of payment is chosen to avoid paying tax and national insurance contributions (NICs). Whichever way you agree to be paid does not affect your liability for paying tax and NIC on your earnings.
Can your employer pay you in cash? Yes. Your employer is allowed to pay you in cash, providing they deduct the correct amount of income tax and NICs under Pay As You Earn (PAYE), payable to HM Revenue & Customs (HMRC) before paying you the remainder – your NET salary (total salary after deductions).
How do you know if your employer is making deductions and forwarding them to HMRC? Employees must receive a payslip each time they are paid, even if paid in cash. This is a legal obligation of your employer.
A payslip must include:
total pay before deductions (Gross pay)
total pay after deductions (Net pay)
Any ‘variable deductions’ depending on salary earned: Tax National Insurance Student Loan Pension Contributions
Payslips might also include:
time period the pay covers
What to do if you do not receive a payslip
If you do not receive your payslip when expected, you should remind your employer immediately. Or, if you are paid through a payroll provider such as Nannytax you should contact them.
What if you never receive a payslip?
Even if you’ve agreed to be paid in cash, you must still receive a payslip. If you are not receiving payslips It is possible that your employer is deliberately avoiding their obligations under PAYE (deducting tax, NIC, and paying employers’ NIC). This is illegal.
Caution: Please bear in mind the following:
If your employer fails to meet their obligations under PAYE, HMRC can, in certain circumstances, demand the unpaid tax and NICs from you, and
You may lose out on state benefits.
How to avoid the above:
If you receive your salary in cash but your employer is refusing to provide you with a payslip and you suspect they are not paying your Income Tax or National Insurance, you should contact HMRC as a matter of urgency. https://www.gov.uk/contact-hmrc
There is also a HMRC fraud hotline to report tax evasion online or by phone. https://www.gov.uk/government/organisations/hm-revenue-customs/contact/report-fraud-to-hmrc