Cash in hand has long been something accepted by people working as builders, plumbers, childminders and other tradespeople but the government has now released proposals to change the rules on the size of payments that can be received in cash without a receipt.
While the practicalities of enforcing a blanket ban on cash in hand payments represents a major challenge, the government is planning to impose rules on larger payments which could be similar to those seen in other European countries such as France and Spain where cash in hand payments are only allowed up to a threshold of £13,000.
While the vast majority of tradespeople are honest about the payments they receive, loopholes do exist if transactions are not accounted for and are not included in tax calculations. Checking how much money self employed tradespeople earn from cash in hand payments is largely reliant on the honesty of individuals to declare the full amounts they have received from customers.
Cash in hand payments are also used in money laundering by criminals who are able to open up businesses taking cash payments. This leads to a thriving black economy where billions of pounds ends up unaccounted for. The government hopes to bring in an extra 3.5 billion a year as a result of the proposed changes to laws on cash in hand payments.