Cash in hand - self assessment
Discussion
A friend of my daughter has asked for some help completing their self assessment and it appears to be a bit of a mess.
Effectively, he has been paid £150 a week cash in hand by his ‘employer’ for the last tax year. He no longer works there and never received any payslip. He has now been asked to complete a self assessment.
My hope is that he completes a self assessment, states he was in effect self employed and as he only earned £7.5k, he will have no income tax or NI to pay.
Is this correct? Will he need an accountant to verify his earnings or will the self assessment and bank statements (if needed) suffice?
Any comments most welcome.
Thanks.
Effectively, he has been paid £150 a week cash in hand by his ‘employer’ for the last tax year. He no longer works there and never received any payslip. He has now been asked to complete a self assessment.
My hope is that he completes a self assessment, states he was in effect self employed and as he only earned £7.5k, he will have no income tax or NI to pay.
Is this correct? Will he need an accountant to verify his earnings or will the self assessment and bank statements (if needed) suffice?
Any comments most welcome.
Thanks.
Terminator X said:
Surely the correct answer is they never worked at all?
TX.
He was paid by bank transfer so a digital trail exists and I’ve told him not to p off the Inland Revenue. TX.
I think the ‘employer’ is bonkers paying people off the books by bank transfer but that’s a different matter.
Declare it as self employed income so that he at least gets to pay his Class 2 Self Employed National Insurance.
He can offset some work related costs if he wants to.
Even though the threshold for paying Income Tax is currently £12,570 per annum, the Small Profits Threshold for self employed National Insurance contributions is only £6,725.
He can offset some work related costs if he wants to.
Even though the threshold for paying Income Tax is currently £12,570 per annum, the Small Profits Threshold for self employed National Insurance contributions is only £6,725.
A900ss said:
Terminator X said:
Surely the correct answer is they never worked at all?
TX.
He was paid by bank transfer so a digital trail exists and I’ve told him not to p off the Inland Revenue. TX.
I think the ‘employer’ is bonkers paying people off the books by bank transfer but that’s a different matter.
TX.
AdamV12V said:
never ceases to amaze me how people are so willing to avoid their legitimate requirement to pay their fair rate of tax. How on earth do people expect the country to pay the public sector and pensions if everyone evades their fair taxes?
I agree with you but this is a young kid who thought he was being employed. Yes, he’s been naive but he didn’t know any better. He’s not trying to avoid anything at all and thought any tax/NI wax being taken care of He’s now realised it wasn’t all above board and needs to correct it.
A900ss said:
I agree with you but this is a young kid who thought he was being employed. Yes, he’s been naive but he didn’t know any better. He’s not trying to avoid anything at all and thought any tax/NI wax being taken care of
He’s now realised it wasn’t all above board and needs to correct it.
Dont get me wrong im sure he is jist the tip of the iceberg and he only owes a couple of hundred quid or so, but its the number of replies to any such “how do i avoid paying my fair share of tax” type threads that people enthusistically reply to that gets my goat!He’s now realised it wasn’t all above board and needs to correct it.
So many people, especially now things are going wrong, just seem hell bent on evading tax (legal tax effeciency is one thing, evading what you are due to pay is another), and yet everyone is quick to finger various policial parites <insert your own wing of politics here> for messing things up, when fundamentally its our UK physche that is “anti paying all forms of taxation” thats the root of all the problems.
Everyone wants to get one up on the other guy by paying less tax and claiming more grants, without a realisation that it all boils down to the taxpayer / voter who chooses not to do the equitable thing!
The country is indeed broken, but its us who are to blame, nobody else!
A900ss said:
My hope is that he completes a self assessment, states he was in effect self employed and as he only earned £7.5k, he will have no income tax or NI to pay.
Is this correct?
Yes. He was self-employed not an employee, so it's up to him to sort his tax out. Doesn't need an accountant.Is this correct?
AdamV12V said:
Dont get me wrong im sure he is jist the tip of the iceberg and he only owes a couple of hundred quid or so,
He won’t owe anything as he hasn’t ‘earned’ enough to pay tax. It’s going to be a paper exercise but as others have said it’ll give him NI accruing years.How did HMRC find out the need for him to complete SA? I suspect the company has him recorded as a contractor/freelance etc. person to balance its accounts.
Armitage.Shanks said:
He won’t owe anything as he hasn’t ‘earned’ enough to pay tax. It’s going to be a paper exercise but as others have said it’ll give him NI accruing years.
How did HMRC find out the need for him to complete SA? I suspect the company has him recorded as a contractor/freelance etc. person to balance its accounts.
He has started a new job where he is officially Self Employed (building trade) and told the Inland Revenue so they sent a SA for last year as well. How did HMRC find out the need for him to complete SA? I suspect the company has him recorded as a contractor/freelance etc. person to balance its accounts.
Armitage.Shanks said:
He won’t owe anything as he hasn’t ‘earned’ enough to pay tax. It’s going to be a paper exercise but as others have said it’ll give him NI accruing years.
How did HMRC find out the need for him to complete SA? I suspect the company has him recorded as a contractor/freelance etc. person to balance its accounts.
He will probably owe fines if he claims to be self employed. How did HMRC find out the need for him to complete SA? I suspect the company has him recorded as a contractor/freelance etc. person to balance its accounts.
AIUI, you have to declare your self employment at the time, not later.
If the reality of his working arrangement is that he was an off the books employee, then he should dump it on his employer and demand his holiday pay.
To be 'self employed' you need to have certain working arrangements, it's not a choice.
A900ss said:
He has started a new job where he is officially Self Employed (building trade) and told the Inland Revenue so they sent a SA for last year as well.
Maybe further issues then?https://www.litrg.org.uk/tax-guides/self-employmen...
The fact is he was employed based on how it has been expressed because all of the things needed to be an employee are in place.
To start retrospectively trying to say otherwise is just silly
The correct thing is to drop his employer in it by asking for his pay slips and what deductions were applied.
Also and it’s not my thing but I recall that a self employed person should register or inform HMRC within 3 months, before going that route I’d be for checking whether one of their many fixed penalties apply.
The reality is he worked for someone else with all the badges of an employee so that’s how it should be recorded
To start retrospectively trying to say otherwise is just silly
The correct thing is to drop his employer in it by asking for his pay slips and what deductions were applied.
Also and it’s not my thing but I recall that a self employed person should register or inform HMRC within 3 months, before going that route I’d be for checking whether one of their many fixed penalties apply.
The reality is he worked for someone else with all the badges of an employee so that’s how it should be recorded
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