The future of cash

[Bletchleyite]

For very many small businesses, I imagine the owner does this while sat in front of the telly. I know when I do it for the charities I volunteer with, that's basically what I do! Technically yes time is money but I think many would rather get the extra couple of percent and count it themselves in their own time.

Quite possibly so. When a business is a labour of love, accounting your own time for it becomes less of a thing.

Only if it actually needs banking though. Many small businesses can pay their suppliers in cash, maybe even their staff in some cases.

Almost certainly evading tax if they do!

I always thought it was, "Turnover is vanity, profit is sanity, but cash is reality."

There's probably more than one version of it. That version makes a lot of sense.

That's fair enough. Personal accounts shouldn't be used for business, except the sort of hobbyist Etsy trader making £500 a year selling Coke cans turned into mini pancake stoves or whatever.

I think Monzo in particular is very strict about this and would see that as a breach of T&Cs, other banks perhaps less so. Crypto traders and the likes also seem to be being caught by this. They seem to be very resolute about what constitutes personal and business use, looking for patterns of usage e.g. ongoing deposits from the likes of PayPal/Ebay in excess of what someone just randomly selling their possessions occasionally would likely get. They seem to bucket it with actual fraud on the grounds that it is probably tax evasion in many cases, so if it happens to you you don't get an explanation (as it's illegal to give one in the case of e.g. money laundering as it may jeopardise criminal proceedings).

 

[styles]

Almost certainly if they're doing this you're in effect accessory to tax evasion. They won't be declaring it for tax if they are doing these things.

"Almost certainly", is a stretch. And they wouldn't have to declare tax for many of these things - businesses are taxed on profit, which, bar the cash they end up keeping and never banking and never declaring, is the same whether they pay their suppliers by cash or bank transfer or credit card*. If I run a market stall for example, and I take only cash, and pay the wholesalers in the morning with cash, my turnover for the day is £3000 and I paid the wholesaler £1000 for the produce and bank the rest, everything is completely above board, I pay the government the same amount of tax, but I save maybe (3000-1000)*0.02=£40 in card payment fees on the revenue, assuming a 2% card processor charge. That's not insignificant and completely above board.

* the fees paid for payment processing are corporation tax deductible but 0.19*0.02*15p profit on a lettuce is like 0.06p.

In evading tax.

Wildly big brush to take.

== Doublepost prevention - post automatically merged: 27 May 2026 ==

I think Monzo in particular is very strict about this and would see that as a breach of T&Cs, other banks perhaps less so. Crypto traders and the likes also seem to be being caught by this. They seem to be very resolute about what constitutes personal and business use, looking for patterns of usage e.g. ongoing deposits from the likes of PayPal/Ebay in excess of what someone just randomly selling their possessions occasionally would likely get. They seem to bucket it with actual fraud on the grounds that it is probably tax evasion in many cases, so if it happens to you you don't get an explanation (as it's illegal to give one in the case of e.g. money laundering as it may jeopardise criminal proceedings).

Monzo have really cracked down on this, based on second and third hand experience.

They are also one of the more innovative banks out there though, so it's possible they just have better ML and AI running to detect potentially dodgy stuff than say, TSB or Nationwide.

 

[35B]

"Almost certainly", is a stretch. And they wouldn't have to declare tax for many of these things - businesses are taxed on profit, which, bar the cash they end up keeping and never banking and never declaring, is the same whether they pay their suppliers by cash or bank transfer or credit card. If I run a market stall for example, and I take only cash, and pay the wholesalers in the morning with cash, my turnover for the day is £3000 and I paid the wholesaler £1000 for the produce and bank the rest, everything is completely above board, I pay the government the same amount of tax, but I save maybe (3000-1000)*0.02=£40 in card payment fees on the revenue, assuming a 2% card processor charge. That's not insignificant and completely above board.

Wildly big brush to take.

Just to note that tax includes VAT. I agree with you on the presumption of guilt, however.

For very many small businesses, I imagine the owner does this while sat in front of the telly. I know when I do it for the charities I volunteer with, that's basically what I do! Technically yes time is money but I think many would rather get the extra couple of percent and count it themselves in their own time.

I’m sure this is true, but it opens a massive fraud risk. Best practice for charities is that counts are done by two unconnected people, in a secure location. If ever the money went missing, the counter would be the first suspect.

 

[Bletchleyite]

"Almost certainly", is a stretch. And they wouldn't have to declare tax for many of these things - businesses are taxed on profit, which, bar the cash they end up keeping and never banking and never declaring, is the same whether they pay their suppliers by cash or bank transfer or credit card*. If I run a market stall for example, and I take only cash, and pay the wholesalers in the morning with cash, my turnover for the day is £3000 and I paid the wholesaler £1000 for the produce and bank the rest, everything is completely above board, I pay the government the same amount of tax, but I save maybe (3000-1000)*0.02=£40 in card payment fees on the revenue, assuming a 2% card processor charge. That's not insignificant and completely above board.

However if you're paying staff in cash, is income tax and NI being correctly declared? In a lot of cases it won't be. Most people don't want to be paid in cash these days, and will only accept "cash in hand" as a means of evading personal taxation.

Wildly big brush to take.

I don't think it is these days. The sign "cash only" as good as means "we are evading tax".

Monzo have really cracked down on this, based on second and third hand experience.

They are also one of the more innovative banks out there though, so it's possible they just have better ML and AI running to detect potentially dodgy stuff than say, TSB or Nationwide.

I suspect it's indeed that they have effective AI to notice it. Certainly if you're doing a side hustle you don't want to be doing it via a Monzo account (unless you take their business account product) as you'll find yourself debanked pretty quickly.

I've not tried it but I reckon if one uploaded bank statements into ChatGPT and said "review these and feed back if you think this person is running a small business through this account" it would do so quite effectively!

 

[35B]

However if you're paying staff in cash, is income tax and NI being correctly declared? In a lot of cases it won't be. Most people don't want to be paid in cash these days, and will only accept "cash in hand" as a means of evading personal taxation.

Hmmm, I think you're extrapolating quite significantly. Those working in businesses like these are disproportionately likely to be in the cash economy anyway. And HMRC's systems are getting increasingly good at identifying issues over payments - doubly so if the employee is claiming benefits.

I don't think it is these days. The sign "cash only" as good as means "we are evading tax".

So you keep saying. Repetition doesn't make it true.

I suspect it's indeed that they have effective AI to notice it. Certainly if you're doing a side hustle you don't want to be doing it via a Monzo account (unless you take their business account product) as you'll find yourself debanked pretty quickly.

And what do Monzo charge for a business account? That sounds less like a really good application of AI, and more like an attempt to secure fees where the older banks have been less efficient. Remember, the tax on that side hustle is my liability to settle, and HMRC will get the data anyway from the banks

 

[Bletchleyite]

And what do Monzo charge for a business account? That sounds less like a really good application of AI, and more like an attempt to secure fees where the older banks have been less efficient. Remember, the tax on that side hustle is my liability to settle, and HMRC will get the data anyway from the banks

Banks are required by law to report financial crime they identify or suspect. You may not like that but it doesn't make it not so.

 

[35B]

Banks are required by law to report financial crime they identify or suspect. You may not like that but it doesn't make it not so.

This is nothing to do with whether or not I like the reporting obligations on banks.

Indeed, they are obliged to report financial crime that they identify or suspect, amongst other reporting obligations - I'm always interested when doing my tax return to see what HMRC have been able to pre-populate. That is not the same as running a side hustle through a personal bank account, or recycling cash into pay packets without going through the bank.

For clarity, if I do not pay the tax that is due on my income, that is between me and HMRC because it is my personal tax liability. It says nothing about the nature of the source of that income, or the legality of my bank deposits. It would only become a criminal matter if HMRC decided to prosecute me rather than use their other extensive enforcement powers to recover the missing tax.

Monzo's approach here is commercial rather than about law enforcement. It is a behaviour that ensures that I would avoid using them, because there are patterns in my finances that could very easily trigger a false positive and cause me harm.

 

[sprunt]

We must be looking at different sources, as the first search I found on their reputation was a £21m fine (reduced from £30m) for lack of controls.

More generally, and for routine stuff, I completely agree about having to telephone a company. But not everything is routine*, and it's the complex stuff that proves whether a bank is or isn't up to scratch. Online reports suggest that Monzo's reputation for that is, at best, mixed.

Right now, my experience in terms of that balance is strongly in favour of NatWest/RBS

Well, thank goodness for their spotless reputation

NatWest has been fined £265m after admitting it failed to prevent money-laundering of nearly £400m by one firm.

A gold trading business suspected of money-laundering deposited £700,000 in cash into one NatWest branch in black bin bags, a court heard on Monday.

In my experience some banks impose upper limits on the value of cheques that can be deposited in this way and for a charity that still necessitates an unpaid volunteer taking time during working hours to physically pay the cheque in at a Post Office or bank branch

Yes, volunteering does tend to require taking time to do unpaid work. I'm not sure what the issue is there.

"Almost certainly", is a stretch. And they wouldn't have to declare tax for many of these things - businesses are taxed on profit, which, bar the cash they end up keeping and never banking and never declaring, is the same whether they pay their suppliers by cash or bank transfer or credit card*. If I run a market stall for example, and I take only cash, and pay the wholesalers in the morning with cash, my turnover for the day is £3000 and I paid the wholesaler £1000 for the produce and bank the rest, everything is completely above board, I pay the government the same amount of tax, but I save maybe (3000-1000)*0.02=£40 in card payment fees on the revenue, assuming a 2% card processor charge. That's not insignificant and completely above board.

Do banks not still charge for cash deposits to a business account? When I worked in a bookies 35 years ago I used to go with the owner sometimes to the bank (he'd wait in the car outside while I went in and dropped the cash off, the days of businesses not even vaguely thinking about security in this kind of thing) and he was always moaning about tHe bank taking their cut.

For clarity, if I do not pay the tax that is due on my income, that is between me and HMRC because it is my personal tax liability.

No, it's between you and all of us if you're stealing from the Exchequer.

 

[35B]

Well, thank goodness for their spotless reputation

Indeed - but I was approaching it from a customer perspective

Yes, volunteering does tend to require taking time to do unpaid work. I'm not sure what the issue is there.

Because volunteers are getting in shorter supply, reducing availability of branches to bank through is becoming an issue.

Do banks not still charge for cash deposits to a business account? When I worked in a bookies 35 years ago I used to go with the owner sometimes to the bank (he'd wait in the car outside while I went in and dropped the cash off, the days of businesses not even vaguely thinking about security in this kind of thing) and he was always moaning about tHe bank taking their cut.

They do. They often also do for charity accounts. Cash is not free, and anyone arguing that is the sole benefit misses the point

No, it's between you and all of us if you're stealing from the Exchequer.

Morally, I agree. But the banks are not there to pre-emptively act as judge, jury and executioner over my tax affairs - not least because they don't have full visibility of them. If a bank chooses to impose rules on the type of transactions they will process for a particular account type, that's entirely up to them. But @Bletchleyite was making out that this was somehow a virtuous act because tax - it's not, it's a commercial decision.

 

[SargeNpton]

Don’t all banks accept cheques through their apps? Mine do!

Lloyds does, but only 100% effective for personal cheques. When I have received things such as car tax refunds on business cheques, the dimensions of the cheque won't fit into the screen that the banking app uses to take a picture of it.

 

[GusB]

However if you're paying staff in cash, is income tax and NI being correctly declared? In a lot of cases it won't be. Most people don't want to be paid in cash these days, and will only accept "cash in hand" as a means of evading personal taxation.

Nonsense. I've been paid in cash in a few of the jobs I've done, mainly small businesses like bars or shops. The money was handed over in an envelope that had all the relevant figures written on the outside, just the same as a payslip. Is it proof that tax and national insurance was actually paid to the taxman? No, but I trusted those employers to do the right thing; they were reputable people just trying to run a business. I didn't mind being paid in cash because I'd be withdrawing it from an ATM anyway and it saved me a journey. I know people who are still paid in cash and the idea that their employers are evading tax is preposterous. I dare you to walk I to one of those places and make that accusation; you would find yourself in court very quickly.

I don't think it is these days. The sign "cash only" as good as means "we are evading tax".

Prove to me that all businesses accepting cash only are evading tax. Show me the results of your in-depth examination of the books of all of these businesses. Are you able to provide that evidence? Until you do so, you cannot make that claim and you should really stop defaming honest people.

 

[MicroLithium]

Nonsense. I've been paid in cash in a few of the jobs I've done, mainly small businesses like bars or shops. The money was handed over in an envelope that had all the relevant figures written on the outside, just the same as a payslip. Is it proof that tax and national insurance was actually paid to the taxman? No, but I trusted those employers to do the right thing; they were reputable people just trying to run a business. I didn't mind being paid in cash because I'd be withdrawing it from an ATM anyway and it saved me a journey. I know people who are still paid in cash and the idea that their employers are evading tax is preposterous. I dare you to walk I to one of those places and make that accusation; you would find yourself in court very quickly.


Prove to me that all businesses accepting cash only are evading tax. Show me the results of your in-depth examination of the books of all of these businesses. Are you able to provide that evidence? Until you do so, you cannot make that claim and you should really stop defaming honest people.

Of course, no one could prove that all cash only businesses are engaged in VAT and PAYE evasion: like politicians, there must be a couple of honest paragons out there. It's an extremely commonplace tactic as any accountant will tell you though, and HMRC try to make examples of the companies that they find enough evidence to recover from. It often amounts to some percentage of turnover being deemed as unreceipted cash, and a negotiation about how large that percentage should be.

 

[Rutland23]

As a publican, Restaurant manger, hotel manager for 35 years, 20 of them self employed, I can see both sides of the arguments here.

When banks were on every corner, it was convenient to bank cash once or twice a week.

But, they charged. 10 years ago it was 1.5% to pay in, and 3% if I wanted to buy change.

credit & Debit cards also incurred charges.

Apart from the processing fees, there was a rental on the terminal, £15 - £20 per month. Taking that with the processing charges, the AVERAGE cost per debit/credit card transaction was £0.46.

Fine, for transactions over £10 or so, but for someone buying a Mars Bar, for example for £0.40, my refusal to accept a card was seen as discriminatory.

I have been out of business for 10 years or so, banks have disappeared from our high streets.

The post office seems to be the only place to process reasonable amounts of cash,and while the apps have filled a lot of the gaps through on line banking, processing cheques has become more difficult.

If the app won't accept the cheque, for whatever reason, getting it processed is now a serious job.

Lloyds/BoS/Halifax won't even let you use the post office any more, go find a branch. I am lucky, it is only a 28 mile round trip to my nearest branch, but others are much worse off.

We need to continue to have access to cash. We need to be able to accept cheques, and have them processed reasonably conveniently. We need to think about businesses and the costs to them of processing whatever payment method we use.

There are still some people, who for whatever reason prefer to use cash or cheques. As an example, my mother is 86, partially sighted, so cannot use internet banking, doesn't like telephone banking as the offshoring of many of the call centres means she has difficulty with accents, and all the local banks have left the island that she lives on.

Discuss.

Regards

Ian

 

[pokemonsuper9]

We need to be able to accept cheques, and have them processed reasonably conveniently. We need to think about businesses and the costs to them of processing whatever payment method we use.

There are still some people, who for whatever reason prefer to use cash or cheques.

I work in billing for a decently sized company that serves a lot of businesses, and we just don't process checks anymore. Any we receive get thrown straight in the confidential waste bin.

I assume credit control will chase them for payment and when they say they sent a check be told we don't accept them (back transfer or direct debit only these days, card payment in special circumstances).