Depositing Large sum of cash into newly opened ISA

If you were paid £120 per week, then that is below the Primary Threshold for National Insurance, but your previous employer would have diddled you out of NI credits if they did not declare your earnings. You are well below the threshold for paying income tax.

Was your previous employer paying you less than the minimum wage for your hours worked by any chance?

I don't see from what you've stated that you have anything to be concerned about. You haven't evaded any tax.

The bank is more likely to suspect attempted money laundering if you turn up to a branch with a large sum in cash. It is usually advisable to phone your bank to discuss depositing such a sum of money. They might ask for some evidence of the source of funds. Do you have payslips from your previous employment?

Are you sure that an ISA is the best place for this money? Rates tend to be lower than normal savings accounts, and your circumstances suggest you won't pay tax on interest either way.

Loufee wrote: »

Thanks for your reply. I wasn't on the books for my previous employer for that period of six months. Iw as just brushing floors and watching them cut hair and in turn received a wage in cash every week. Before this I worked for a corporation part time weekends whilst attending university.

I want to open an isa because its a first time buyers isa with 2.6 percent interest every year with a 35 percent government bonus when you buy a house.

Yes a HTB ISA is certainly worthwhile to hold, as the interest rates are higher than normal cash ISA rates (and it is a 25% Government bonus, not 35%). You do realise you can only pay a maximum of £1200 into a HTB ISA in the first month, then £200 per month. So you'll need to think about what to do with the rest of the cash. But you might be better off with a Lifetime ISA, which would allow you to deposit £4000 per tax year.

I know I have nothing to hide but I just can't help but worry considering the past few years earnings would seem impossible to save this much. Although I have had Christmas money, birthdays, gifts bought like a car from parents etc which has also helped me gather this.

To be on the safe side, should I file my tax return this year (which is around 10k earnings) then deposit the cash?

Loufee wrote: »

I did not declare this

I'm assuming, as per Dazed's post that your 6 months of employment was during the 2017/18 tax year. If you failed to declare these earnings on your 2017/18 tax return, then you really ought to go back and amend your return.

Will your income still be below your Personal Allowance even including this extra ~£3,120 income you did not previously declare? If your total income is still below your Personal Allowance then nothing will happen, but you can sleep soundly at night knowing that HMRC have the correct information on file. If this additional income pushes you into paying basic rate tax, if you declare it now you'll need to pay the income tax you owe plus interest (charged for late payment). Obviously if there is unpaid tax and you do not declare it now, the consequences would be more serious if HMRC finds out about it.

Filing or not filing your tax return this year will have absolutely no impact on your ability to deposit this money. It is your bank that you'll need to convince this money was legitimately obtained, not HMRC.

Loufee wrote: »

Thanks for the advise, maybe I'll just lodge the money slowly into the Isa overtime.

The thing is I filed for self employment for when I officially became self employed and the money I made from then on in was recorded. The period of six months working as a trainee beforehand was paid to me by the owner of the shop and in my case im aware it was his duty to pay any taxes due on my wage as I was classified as his employee so he was in charge of that. Obviously he didn't do this as I assume he was doing it "under the table" so to speak.

Based on what you have told us, your previous employer had no need to pay any income tax or national insurance on your behalf during your period of employment. However, he should have declared your income so that you were entitled to NI credits as your income was above the limit to qualify for these, but below the limit where any tax was due. He didn't have to pay any employer national insurance either, so there was nothing for him to gain by not declaring it.

He may or may not have declared your income, but presumably he did not because that information would have been pre-populated on your tax return if he did. A bit naughty on his part, admittedly, but he hasn't evaded any tax either on his part or on yours.

BUT, and it is a big but, hence the capitals! Even though there was no tax due at the time, because you were earning too little per week, when you started earning through self-employment everything changed...

You filled out a tax return in which you had an obligation to declare all of your income, including the income from your previous employment. When you submitted your tax return, you made a declaration that the information was complete and accurate to the best of your knowledge. You may or may not have evaded tax as a result of making a false declaration, but you definitely made a false declaration if you earned money in the 2017/18 tax year and didn't declare it.

Had you not filled out a tax return, you might have been able to plead ignorance about what your previous employer declared. But you were asked about your income, and you failed to declare these earnings.

You have the opportunity to correct this. It is in your best interests to do so, even if it costs you a few pounds in tax. If you do not, you run the risk of it costing you more.