Home Money My builder wants a job paid in cash. Is that legal?

My builder wants a job paid in cash. Is that legal?

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 My builder wants a job paid in cash. Is that legal?
  • Britons find it harder to withdraw money to pay builders who demand cash
  • Some banks will not allow large cash withdrawals as part of anti-fraud measures
  • We asked a tax expert if it’s legal to pay cash for a job

I am doing work at my house.

After receiving a few quotes, a builder who came highly recommended agreed to do the work for around £5,000 after I asked if there was room to negotiate the price he had quoted me.

I was happy to go with him, but he asked to be paid in cash for the job. He said this price is a “prompt payment discount.”

Is it legal to pay for work in cash? I don’t want to have any problems with my bank or the tax authorities, but I would also like the discount.

Brits are finding they are being denied access to their own money when they try to pay the builder in cash and are denied by their bank.

Helen Kirrane from This is Money responds: We’ve probably all been asked at least once to pay cash instead of bank transfer for a job or service.

But in recent years, some have found it more difficult to withdraw large sums of cash over the bank.

Some do not allow customers to withdraw large sums of money for services such as construction work or major purchases such as cars, as they try to avoid fraud and justify that they do not facilitate money laundering.

Some people are quick to equate paying for a job in cash with tax evasion, thinking that companies can avoid charging or paying VAT if they offer a cash discount.

Ultimately, it is the builder’s responsibility to meet their tax obligations, not their client.

Heather Rogers, resident tax expert at Money: A cash discount is a normal, perfectly legitimate business transaction

Heather Rogers, resident tax expert at Money: A cash discount is a normal and perfectly legitimate business transaction

But what happens if you pay someone in cash without knowing if it will be reported? Can you get in trouble?

We asked Heather Rogers, Money’s resident tax expert.

Heather Rogers, Founder and Owner of Aston Accountancy responds: Some companies will offer a “early payment discount.”

This is intended to receive payment on time and means you will pay less if you pay before the due date as a percentage discount will be applied to the amount due.

This is a normal and perfectly legitimate business transaction.

However, suggesting to a company that you will pay cash to receive a discount on the basis that the company will not report the cash is an entirely different matter.

Aiding tax evasion, and therefore aiding money laundering, is a serious crime. The business owner could also refuse to provide services following such a suggestion.

In fact, many businesses now do not accept cash payments, except for small amounts, due to the money laundering regulations that many businesses are subject to.

Have you been prevented from withdrawing a large sum from your bank? Get in touch: editor@thisismoney.co.uk

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