Can You Work For Cash In Hand While Claiming Universal Credit?

If you are wondering whether or not you can work for cash-in-hand while claiming Universal Credit, you will find the answer to your question in the following blog post. While we will mainly be guiding readers towards the answer to this question, we will also discuss declaring your cash-in-hand earnings to HMRC and DWP and how they will affect your Universal Credit claim.

Can You Work For Cash In Hand While Claiming Universal Credit?

Yes, you can work for cash in hand while claiming Universal Credit, as long as you fulfil the following conditions:

• declare your cash-in-hand income to the HMRC and pay the applicable tax
• declare your cash-in-hand income to the DWP for your benefits claim

While some individuals believe that receiving cash in hand for a job (whether temporary or permanent) is illegal, the truth is not so.

It is completely legal to receive cash-in-hand payments for a job; whether or not you claim benefits such as Universal Credit.

However, a Universal Credit claimant needs to make sure that they declare their cash-in-hand income to the HMRC and pay the required amount of income tax and National Insurance contributions since their employer would not have made these deductions (which is normally the practice when you receive income through the PAYE system).

If someone is working for cash-in-hand while claiming Universal Credit and declaring their income to the HMRC and DWP, they can be convicted of tax fraud and benefit fraud for deliberately hiding their income to avoid paying taxes and continuing to receive benefits.

How Do You Declare Cash In Hand While Claiming Universal Credit?

How you declare cash-in-hand income depends on the nature of your income; whether it is a regular income or a one-off casual income. This income should be declared to the HMRC for a tax deduction and the DWP for your income assessment for a Universal Credit claim.

In the case of declaring your income to the HMRC, regular income will be declared by getting yourself registered as self-employed on the HMRC website, providing details of your earnings and allowable expenses and submitting your taxable income figure.

For cash-in-hand earned through a casual income, you need to fill in the SA1 form on the UK Government’s website and declare cash-in-hand earnings. 

The deadline for declaring cash-in-hand income during the 2022-23 tax year, is 5th October 2023 to register yourself as self-employed and 31st January 2024 for filing your tax return.

In both cases, you will only be required to declare cash-on-hand income that is more than £1,000. This means that if you earn less than £1,000 you don’t need to declare the income to HMRC.

In the case of declaring your cash-in-hand income to the DWP, you simply need to sign in to your Universal Credit account and mention your income in your Universal Credit journal.

How Does Your Cash In Hand Income Affect Your Universal Credit Payments?

How your cash-in-hand income affects your Universal Credit payments depends on the following factors:

• the standard amount you claim for Universal Credit
• whether you claim any additional elements of Universal Credit
• the amount you earn
• whether your earnings are casual or regular
• whether you are affected by the Benefit Cap
• whether your benefit payment is affected by a sanction or reduction

The standard amount you claim for Universal Credit is based on your age and if you have a partner and can fall in either of the following categories:

• if you are single and under 25 you get £265.31 a month
• if you are single and 25 or over you get £334.91 a month
• if you are living with a partner and both are under 25 you get £416.45 a month
• if you are living with a partner and one or both are over 25 you get £525.72 a month

Then, you can top-ups to your standard amount of the payment if you are unable to pay for expenses related to housing, children, childcare, caring for someone, inability to work due to sickness or disability or if you get a severe disability premium.

Your cash-in-hand earnings will be deducted from your estimated claim, as well as any sanctions or reductions (if applicable). The remaining amount will be assessed on whether the Benefit Cap applies to you; resulting in the final amount of payment you will receive for your Universal Credit claim.

Conclusion:

The above discussion makes it quite clear that you can work for cash-in-hand while claiming Universal Credit as long as you declare your earnings to the HMRC for a tax deduction and the DWP regarding your income assessment for your Universal Credit claim.

References:

How Tax Works on Cash in Hand Work – self-employed. co

Cash in Hand Payments | East Cambridgeshire District Council