Is it illegal to pay a builder cash in hand?

In England, and across the UK for the cash and VAT points below, paying in cash is not the problem: hiding tax is. Rent paid in cash is legal too, but receipt duties differ between England, Wales, Scotland and Northern Ireland.

Is it illegal to pay a builder or tradesman in cash?

It is not illegal in the UK to pay a builder or tradesman in cash, as long as the payment is genuine, recorded properly, and not part of tax evasion or money laundering. A contractor paying a subcontractor still has to deal with CIS correctly because HMRC says: “Under the scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status, as determined by HMRC.” A customer and builder can agree on cash because a business may choose what payment methods it accepts; the Bank of England puts the basic rule simply: “A shop owner can choose what to accept.” The £10,000 cash anti-money-laundering rule is narrower than many people think: HMRC describes high value dealers as those receiving cash payments “for goods totalling £10,000 or more,” so it does not automatically catch a labour-only builder. Paying a contractor in cash is lawful; paying cash with no invoice is the danger signal.

Is it illegal to pay cash to avoid VAT?

A customer who pays cash knowing VAT is being evaded can be prosecuted and fined £20,000 or three times the VAT, whichever is greater, so paying a builder cash to avoid VAT is not just the tradesperson’s risk. The VAT Act says a person who accepts services “having reason to believe that VAT on the supply of the goods or services or on the importation of the goods has been or will be evaded” is liable on summary conviction to “a penalty of £20,000 or three times the amount of the VAT, whichever is greater.” The wider offence also catches anyone “knowingly concerned in” fraudulent VAT evasion. That is different from using a small, unregistered tradesperson: VAT registration is required only when taxable turnover exceeds £90,000, because GOV.UK says, “You must register if your total taxable turnover for the last 12 months goes over £90,000.” The £85,000 figure still found on some older pages is out of date.

Is it legal to collect rent in cash?

It is legal to collect rent in cash, but England, Wales, Scotland and Northern Ireland have different receipt rules. In England, cash rent is allowed — Shelter’s landlord-law guidance says: “For example, rent can be paid by bank transfer, cash or cheque.” England has no cash-specific rent-receipt law, but weekly rent triggers a rent book duty: “Where a tenant has a right to occupy premises as a residence in consideration of a rent payable weekly, the landlord shall provide a rent book or other similar document for use in respect of the premises.” Wales does not require an automatic receipt for every cash payment; it requires one within 14 days of the contract-holder’s request. In Scotland, a landlord under a private residential tenancy must give a written receipt for every cash rent payment. Northern Ireland also requires a receipt for cash payments, and failing to provide one is an offence.

Last reviewed September 2026.

Sources

• HMRC, Construction Industry Scheme guide CIS 340 — “Under the scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status, as determined by HMRC.” Source
• Bank of England, What is legal tender? — “A shop owner can choose what to accept.” Source
• HMRC Economic Crime Supervision Handbook ECSH51650 — “HMRC is the supervisory authority for high value dealers (HVDs) – i.e. those making or receiving cash payments for goods totalling £10,000 or more in a single transaction or linked transactions – unless the business is already supervised by the Financial Conduct Authority (FCA).” Source
• Value Added Tax Act 1994 s.72 — “If any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of VAT by him or any other person, he shall be liable—” Source
• Value Added Tax Act 1994 s.72 — “If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services or on the importation of the goods has been or will be evaded, he shall be liable on summary conviction to a penalty of £20,000 or three times the amount of the VAT, whichever is greater.” Source
• GOV.UK, Register for VAT — “You must register if your total taxable turnover for the last 12 months goes over £90,000.” Source
• Shelter England, rent lawfully due from the tenant — “For example, rent can be paid by bank transfer, cash or cheque.” Source
• Landlord and Tenant Act 1985 s.4 — “Where a tenant has a right to occupy premises as a residence in consideration of a rent payable weekly, the landlord shall provide a rent book or other similar document for use in respect of the premises.” Source
• Renting Homes (Supplementary Provisions) (Wales) Regulations 2022 reg.12 — “Within 14 days of a request from the contract-holder, the landlord must provide the contract-holder with written receipt of any rent or other consideration paid under the occupation contract.” Source
• Private Residential Tenancies (Statutory Terms) (Scotland) Regulations 2017 schedule — The statutory terms require a landlord to give a tenant a written receipt when rent is paid in cash. Source
• Private Tenancies (Northern Ireland) Order 2006 art.5 — “The landlord must provide the tenant with a written receipt for the payment stating—” Source