{"id":8903,"date":"2020-12-15T15:33:26","date_gmt":"2020-12-15T15:33:26","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=8903"},"modified":"2025-09-16T13:27:53","modified_gmt":"2025-09-16T12:27:53","slug":"how-is-self-employed-cash-in-hand-work-taxed","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/general-self-employed-tax-faqs\/how-is-self-employed-cash-in-hand-work-taxed\/","title":{"rendered":"How is self-employed cash in hand work taxed?"},"content":{"rendered":"\n

It can be tricky to work out how self-employed cash in hand work is taxed. While most of us prefer money to land in a bank account, on-time and with the appropriate invoice number as a reference, the reality is that sometimes a client will pay you cash in hand. <\/p>\n\n\n\n

If you\u2019re employed, you receive a payslip detailing your salary, pension and tax, like Income tax and National Insurance contributions (NIC). In this case, you need to keep an eye on your tax code and make sure it correctly reflects your situation. You can use our tax code checker<\/a> to see what the letters mean and how they relate to your salary.<\/p>\n\n\n\n

Your payslip also outlines how much tax and NIC you have paid over the past year. <\/p>\n\n\n\n

If you\u2019re paid cash-in-hand, however, you report your earnings to the government yourself via a tax return.<\/p>\n\n\n\n

If I\u2019m earning cash in hand, do I have to do a tax return?<\/h2>\n\n\n\n

Just like if your earnings are paid into a bank account, you declare any cash in hand earnings on your Self Assessment tax return to HMRC. Here’s when to do this plus the other relevant deadlines.<\/p>\n\n\n<\/div> \n\n

\n
\n

Key dates in the current <\/span>2025\/26 tax year \ud83d\udc47<\/b><\/p>\n\n\n\n\n\n\n\n\n
Deadline<\/b><\/td>\nDate<\/b><\/td>\nYear<\/b><\/td>\n<\/tr>\n
Tax year starts<\/span><\/td>\n6th April<\/span><\/td>\n2025<\/span><\/td>\n<\/tr>\n
Tax year ends<\/span><\/td>\n5th April<\/span><\/td>\n2026<\/span><\/td>\n<\/tr>\n
Register for self assessment<\/span><\/td>\n5th October<\/span><\/td>\n2026<\/span><\/td>\n<\/tr>\n
Pay tax bill by PAYE salary<\/span><\/td>\n30th December<\/span><\/td>\n2026<\/span><\/td>\n<\/tr>\n
Self assessment deadline<\/span><\/td>\n31st January<\/span><\/td>\n2027<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n <\/div>\n<\/div> \n\n
\n\n\n\n\n\n

How is self-employed cash in hand work taxed and how much is it?<\/h2>\n\n\n\n

Tax on any income is made up of Income Tax<\/a> and National Insurance<\/a>, and cash in hand is no different. The rate of Income Tax that you pay in the current tax year is based on how much you earn.<\/p>\n\n\n<\/div> \n\n

\n
\n

The <\/span>income tax<\/b> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n\n\n\n\n\n\n\n
Income<\/strong><\/td>\nTax rate<\/strong><\/td>\nTax band<\/strong><\/td>\n<\/tr>\n
Up to \u00a312,570<\/span><\/td>\n0%<\/span><\/td>\nPersonal allowance<\/span><\/td>\n<\/tr>\n
\u00a312,571 to \u00a350,270<\/span><\/td>\n20%<\/span><\/td>\nBasic rate<\/span><\/td>\n<\/tr>\n
\u00a350,271 to \u00a3125,140<\/span><\/td>\n40%<\/span><\/td>\nHigher rate<\/span><\/td>\n<\/tr>\n
over \u00a3125,141<\/span><\/td>\n45%<\/span><\/td>\nAdditional rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n <\/div>\n<\/div> \n\n
\n\n\n\n\n\n

When it comes to National Insurance, the point when you start paying this is the same as that for income tax. When you earn more than the personal allowance: the tax-free portion of your income. <\/p>\n\n\n<\/div> \n\n

\n
\n

National Insurance<\/b> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n\n\n\n\n\n\n\n
NI class<\/strong><\/td>\nWho pays?<\/strong><\/td>\nHow much?<\/strong><\/td>\n<\/tr>\n
Class 1<\/span><\/td>\nEmployees earning over \u00a312,570<\/span><\/td>\n8% on earnings between \u00a3242 and \u00a3967 per week<\/span><\/p>\n

2% if you earn \u00a3967+ per week<\/span><\/td>\n<\/tr>\n

Class 1A\/1B<\/span><\/td>\nEmployers<\/span><\/td>\n15%<\/span><\/td>\n<\/tr>\n
Class 3<\/span><\/td>\nVoluntary contributions<\/span><\/td>\n\u00a317.75 per week<\/span><\/td>\n<\/tr>\n
Class 4<\/span><\/td>\nSelf-employed earning over \u00a312,570<\/span><\/td>\n6% on profits between \u00a312,570-\u00a350,270<\/span><\/p>\n

2% on profits over \u00a350,270<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n <\/div>\n<\/div> \n\n

\n\n\n\n\n\n

How can I keep track of cash in hand payments?<\/h2>\n\n\n\n

Keeping track of self-employed income is always important for tax purposes. But it\u2019s even more important if you\u2019re paid cash in hand. This is because there’s no digital record of the payment. <\/p>\n\n\n\n

You need to keep track of cash in hand self-employed earnings to ensure you pay the correct amount of tax. You must also be prepared to provide HMRC proof if they should launch an investigation into your earnings. <\/p>\n\n\n\n

As long as you\u2019re keeping good records, there shouldn\u2019t be anything to worry about. But here are some of the key things you should be doing to keep track of cash in hand earnings. <\/p>\n\n\n\n