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There is nothing to stop you paying an employee in cash if it works for your business.  Many small businesses still handle quite a lot of cash, and it minimises the administration work and keeps banking costs down to reuse the cash in hand for wages.

However, a payroll will still need to be run. The employee will still have PAYE Tax and NI deductions made where required, and they will still need to be given a payslip. Make your employee aware that deductions will still be made as some ask for payment in cash in the hope of no deductions.

If staff wages are under the threshold for deductions, under some circumstances a payroll will not need to be run, but complete and auditable records will still need to be kept.  Take a look at the blog which talks about whether you need to run a payroll.  This is based around a part-time employee, but the thresholds and conditions are the same no matter how many hours your staff work.

If your business banking is mainly electronic, and paying an employee in cash would cause difficulty you can state in the employment contract that payment is made via bank transfer.

This is a decision made between the employer and the employee, but as the employer you should be able to dictate the method of payment used.

 

More information about paying an employee in cash can be found on the Gov.uk website here:

https://www.gov.uk/guidance/paying-employees-cash-in-hand-or-guaranteed-take-home-pay

PayrollAbility’s Payroll Outsourcing and Employment Contract Services are simple and easy to use, value for money and remove the stress caused by extra administrational tasks within your business.  Call us today on 01384 92 90 20 or complete our Contact Form.  We look forward to seeing how we can support you as you build your business.