What does the future hold for tax avoidance in the ‘Cash in hand’ industry?

Tax avoidance in the UK means that the government could be losing out on billions of pounds in taxes from those who earn their wages through cash in hand jobs, but, what can be done to stop this?

The government is looking at the way laws work surrounding collecting payments for jobs such as: window cleaning, child-minding, gardening, freelance manual labour etc. Billions of pounds of extra tax revenues could be collected if payments for work such as this were made via government-accredited platforms. This would ensure that it could be correctly taxed.

Could it be possible that if laws were changed enough to stamp down on tax avoidance that a persons’ right to work would be linked to whether or not they are using an approved payment method? Would this be too harsh, or do you think it would be a credible method for monitoring and controlling taxation?

The issue is – paying someone cash is not illegal, but, the recipient should declare it for being taxed as income. However, many people in a job where cash is their predominant source of income would likely not be inclined to declare this.

In March this year, Chancellor Philip Hammond, released his spring statement which included many things, one in particular that is stirring some talk amongst small trades – the potential for large cash in hand payments to be banned. If this were to be implemented not only would this take away feelings of guilt from customers, it would also pull in an estimated £3.5 billion per year.

Other countries already have limits in place. France, Spain and Belgium have a limit of up to £13,000, and the UK is now looking at the possibility of following a similar system.

Another option discussed is that plumbers, builders and other tradesmen could be forced to issue receipts for all of their work. This would serve as a written record of a job being carried out.

So, what does the future hold?

In short, this is still a very hot topic, and one that will be a rough journey changing as much as the tide, but, whatever the outcome, the NCA will be diligent and ready for any change that comes.

Thomas Marples – Head of NCA said: ‘The construction industry has strong traditions in work being paid cash- in- hand. This is a topic that has much debate outside of the construction industry. The construction industry will continue to adapt and develop towards the challenges posed by policy changes.’

The National Construction Academy, part of 3aaa Apprenticeships, continues to work with employers across Derbyshire, providing them with enthusiastic, talented employees who are supported by high-quality training.

The National Construction Academy also work with local Levy paying construction firms, to utilise their levy funds through construction Apprentices.

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