Self Assessment · Record keeping

Cash jobs, receipts, and what HMRC expects

There's no such thing as 'cash in hand' to HMRC — there's just income you declared and income you didn't. Here's how to handle cash properly, and why good records are your best protection.

Cash income: the rule

Every pound a customer pays you is taxable income — whether it arrives by bank transfer, card machine, or as notes in an envelope. The payment method changes nothing about the tax. What it changes is the paper trail: a bank transfer documents itself; cash only exists in your records if you put it there.

That cuts both ways. Undeclared cash income is tax evasion, and HMRC is better at spotting it than people assume — they compare your declared income against your lifestyle, your suppliers' records, and what similar businesses in your area declare. But properly recorded cash income is completely fine, and the cash expenses you pay for materials are deductible like any other — if you kept the receipt.

The deposit mismatch

A common enquiry trigger: bank deposits that don't match declared income. If you take £300 cash for a job, spend £100 of it at the merchant, and bank the £200 — your records need to show the £300 income and the £100 expense, not just a £200 deposit. Record the gross, not what reached the bank.

What you must keep — for 5 years

HMRC requires you to keep records for at least 5 years after the 31 January filing deadline of the relevant tax year. In practice that means everything below, going back roughly six years:

Records of all sales and income — including cash

Receipts for every business expense you claim

Bank statements (business and any mixed-use accounts)

Invoices you've issued and quotes you've given

Mileage logs if you claim vehicle costs

VAT records, if registered

Under Making Tax Digital these records must be kept digitally — a shoebox of paper no longer satisfies the rules, but a photo of each receipt does.

Why receipts matter even when nobody asks

Without a receipt, an expense claim rests on your word. In an enquiry, HMRC can disallow undocumented expenses entirely — and once a few claims fall over, they tend to look harder at everything else. With receipts, the same conversation is short: here's the evidence, next question.

The 30-second habit

Photograph the receipt before you leave the counter. Thermal paper fades to blank within months — the photo is the durable record, and under MTD it's also the compliant one. A receipt photographed at the till is evidence; a faded curl of paper found in a van door in January is a story.

A clean cash routine

1
Record cash income the day you receive it — amount, date, customer, what the job was.
2
Bank cash takings regularly rather than living out of the float — it builds a trail that matches your books.
3
Photograph every receipt at purchase, including cash buys at the merchant — those are deductible expenses you'll otherwise forget.
4
Give customers an invoice or receipt for cash jobs, and keep your copy — it evidences the income side.
5
Never net things off: record £300 income and £100 materials, not '£200 cash job'.

Snap it, and it's recorded

Photograph a receipt and Get Sorted reads the amount, date and category — and for cash purchases, records the expense straight into your books.

Try Get Sorted free →

HMRC sources

gov.uk — Business records if you're self-employed gov.uk — Keeping your pay and tax records

Always verify current thresholds and rates directly with HMRC or a qualified accountant.