My builder wants a job paid cash-in-hand – is that legal?

  • Britons finding it harder to withdraw money to pay builders who ask for cash
  • Some banks won’t allow large cash withdrawals as part of anti fraud measures
  • We asked a tax expert whether it is legal to pay for a job in cash 

I’m having work done to my house.

After receiving a few quotes, one builder who came highly recommended agreed to do the job for a round £5,000 after I asked if there was room for negotiation on the price he quoted me.

I was happy to go with him, but he has asked to be paid in cash for the job. He said this price is a ‘cash discount’.

Is it legal to pay for the job cash in hand? I don’t want to get into any trouble with my bank or the taxman, but also would like the discount.

Britons are finding that they are being denied access to their own money when trying to pay the builder in cash and being refused by their bank

Helen Kirrane of This is Money replies: We’ve all probably been asked to pay in cash rather than by bank transfer for a job or service at least once.

But in recent years, some have found it harder to withdraw large sums of cash over the counter at the bank.  

Some do not allow customers to withdraw large sums for services such as building work or for big purchases such as cars as they try to ward off fraud and justify that they are not facilitating money laundering.

Some people are quick to equate paying for a job cash-in-hand with tax evasion, thinking firms may not be charging or paying VAT if offering a cash discount.

Ultimately, it is the responsibility of the builder to fulfill their tax obligations, not their customer.

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

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

But what happens if you pay someone cash in hand, not knowing if it will be declared – can you get in trouble? 

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

Heather Rogers, founder and owner of Aston Accountancy replies: Some firms will offer a ‘cash discount’.

This is aimed at receiving payment promptly, 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 business transaction and perfectly legitimate.

However, suggesting to a business that you will pay cash in order to receive a discount on the grounds the business will not declare the cash is a completely different matter.

Assisting tax evasion and by that, aiding money laundering, is a serious offence. The business owner might also refuse to provide services following such a suggestion.

In fact, many businesses now won’t accept payments in cash, other than small amounts, due to the money laundering regulations, to which many businesses are subject.

Have you been blocked from withdrawing a large sum from your bank? Get in touch: