How To Pay Child Maintenance.

                                                

This article assumes that an application has been made to the Child Maintenance Service (CMS) and that a schedule of payments has been issued by the CMS.

So you have received the payment schedule and you are wondering what to do next.  First thing to do, is to read the schedule.  It might say you have to pay £50 per week, but there might be arrears meaning that you have to pay £55 per week.  So skip past the headline figure and go to the table where it says on what day you have to pay and how much.  


Its common to have arrears at the beginning of a case.  This is because payments are calculated from the date the case is opened, but there could be a two week delay as the CMS collect details and produce a schedule.

All arrears are normally paid off over the course of the year.  So make sure you are following the schedule so that the arrears disappear over the year.  Never pay the arrears figure.  Ignore it.  Only pay the payment figure.

Here are the tips for paying.

1.  Rule number one is never pay cash, unless the other person is going to sign for it. 

2.  Rule number two is never pay by cash, even if the other person signs for it!

3.  Pay by standing order so you never miss a payment.

4.  If you cant pay by standing order, pay by bank transfer.  Set a weekly alarm on your phone so you dont forget.

5.  Dont use the childs name as the reference.  It could be argued, its a gift.  For the reference, make sure you put CMS or Child Maintenance

6.  Use the parents Name for the Name to pay to followed by Maintenance if there is room.
  

        ie.   Amy Short maintenance

If you follow steps 5 and 6 it should show on the bank statement of the receiving parent as 

               Amy Short Maintenance CMS 

7    Use one bank account to make payments from.  Dont use it for anything else.  At some point you may have to use the statement to prove payments.  You don't want others to see your salary and expenditure.

8   Pay the exact amount due, on the day it is due.  Never pay late or early.

9.  When you first speak to the CMS they will arrange a payment schedule and will ask you what frequency you want to pay.  Avoid paying on Mondays due to the large number of bank holidays, as that means you will be late at least 5 times per year.  Also consider avoiding a Friday schedule unless you get paid on a Friday.  At least one Friday per year is a bank holiday, ie Good Friday.  Sometimes Christmas Day, Boxing and New Years Day are also on Fridays.

10  If you dont know the account to pay it to, ask the CMS to log the fact you don't have the account details.  They will get them for you.  Chase daily until you have the bank details.  If you do not have the bank details within two weeks, ask the CMS to close the case as the other partner is being non compliant.  Save the money until you have the details and then pay it.

11  Don't pay online via the portal.  It wont get to the other parent on time, so you will be late, and you may be charged up to 20% for doing so.

12  Tick the payments off of your payment schedule as you make them.

13  If you receive a salary increase, pay some of the salary to the account so that you have the money ready when the payments are revised upwards.  

14.  Do not arrange to pay the day before pay day if you struggle to budget.  If you are paid weekly on a Friday, don't agree to pay every Thursday as you will be late at some point if you have spent too much money.  If you arrange to pay monthly, don't ask to pay on the 28th of the month if you get paid on the last day of the month.

15.  If you pay monthly, choose a day between the 1st and the 28th.

16.  Child Maintenance is a priority bill.  Do not forget to pay or you could be put onto a DEO.  That will cost you 20% more money.

17.  Only pay what the schedule says.  Build up a reserve in case your payments are increased.  You will get no future credit for underpaying or being late in the future even if you paid extra previously.

18.   If in arrears and a schedule is arranged.  Demand to pay arrears off at £5 a week, dont over commit yourself.  

Private Pensions & CMS

Private Pensions and Child Maintenance

Everyone should consider paying into a Pension to supplement the State Pension which at the time of writing is worth, £134.25p per week.  However the difficulty is that if you are making maintenance payments you may struggle to do so.

However there is the possibility of some relief to help you out.  In a nutshell, paying into a pension reduces your taxable income, and therefore less CMS is payable when that income year is taken into consideration, the following year.

For example if you earn £20K per year, you pay CMS on 20K.

If you pay £2K per year into a pension, that is subtracted from your income, meaning that you only pay CMS on £18K.

Note.  You have to provide CMS evidence of contributions if you pay into a private pension, not through salary.  I.e,  Send them your pension statement showing your contributions for the tax year, after the tax year has ended.

Regulation 40 of The Child Support Maintenance Calculations Act 2012 enshrines in law that child maintenance payments can be reduced to take into account pension contributions, but a past tribunal case, confirmed that CMS can consider a limit on the transactions.

Despiter the fact, that since April 2023, the government have allowed people to contribute £60,000 per year into a Pension, the CMS have their own view.  CMS Policy and Procedures advise staff to consider if pension contributions are excessive.  They do this by using two tests.

Whats Best?  A Work or Private Pension.

This is a blog concerning Child Maintenance and the Child maintenance Service policies.  Its not an investment blog, nor does it provide financial advice.  You should do your own research and consider independent financial advice. 

From a non investment view, we would suggest that your work pension is the easist to manage when it comes to the Child Maintenance Service.  This is because normally your income reported to HMRC is after pension deductions.  As a result CMS will not know how much of your salary has been reduced by the pension as they only see the gross income after the pension has been removed.

However some employers take the pension after deduction of tax and National Insurance.  This means CMS see the whole income.

Where someone pays into a private pension, CMS see the whole income, and have to make a deduction for the private pension, once evidence (in the form of the annual pension statement), is provided.

This means that each year the CMS produce a calculation based on a tax year, and then you have to send the pension statement into claim the reduction.  Do not send it in before the calciulation as CMS staff wont be able to adjust until the Annual Review is complete.  The Annual Review is automatic, and done by computer and this prevents staff from adjusting the calculation, before it is produced.

Test One:  Are the contributions appropriate for the age of the person contributing?

They test this by looking at the pension contributions being made and compare it to defunct Financial Services Agency (FSA) guidelines try to establish if someone is trying to avoid maintenance by paying into a pension.

The starting point is that by paying 12% of a salary to a pension, its not excessive.

Above 12% they make an age based comparison using the old FSA guidelines:

Age contributions started	Required % of income
30	12 - 18%
35	16 - 22%
40	18 - 25%
45	25 - 30%
50	30 - 45%
55	45 - 70%

So in theory, someone who is 50 years old can start making pension contributions of 45% of their salary.

The important thing to remember is that legally you can put £60,000 per year into a pension, where as CMS use the percentages above as a guide.  Whats more, in recent months CMS have been telling people at the top end of the age range, 40 plus for example, that because their pension started 20 years ago they can only put in the 12-18%.

We do not think that is fair and that should be argued.  Someone may have opened a pension when under 30, but may not have put enough contributuions in, or made some bad investment decisions, therefore we feel that CMS have no grounds to stand on regarding this, and the only bar on pension contributions should be the 60K annual contribution allowance.  Please get in touch if CMS are telling you otherwise.

Test Two:  Do the Pension Contributions provide a pension benefit greater than current income?

In short they look at the pension benefit statement.  If that shows that the pension benefit is going to produce an income greater than the current income, contributions are probably excessive.

For example, someone earning £20,000 should not be contributing so much that they will have a likely pension income of £30,000.

Remember, pension contributions, must not be done in order to avoid paying child maintenance.  They must be made to provide a pension.

Tip:  Pay a regular amount, avoid making single contributions at the end of the tax year, to lower future liability as this might be considered to be due to avoid paying maintenance.  

If you dont understand pensions, I have made a video to try to explain how they affect CMS liability.  Neither this blog, or the video, should be considered to be financial advice.  

One thing to note, is that where pension contributions are made to a private pension, ie from someones bank account and not from by salary, the pension relief needs to be claimed.

To claim, the pension statement which shows the contributions, and the tax relief applied  needs to be sent to the Child Maintenance Service.  The most efficient way to do this is to upload the full statement to the portal.  In quiet times of the year, the calculation will then normally be lowered from the next payment.

Higher rate tax payers can normally claim back higher pension tax relief via their tax return.  In order for that contribution to be taken into account, the HMRC tax calculation should be sent to the CMS.

Further Information:

Child Maintenance - Book available from Amazon.co.uk

   Buy Now

Child Maintenance Regulations Concerning Pension Contributions

   Regulation 40 Legislation

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CMS Telephone Number

How to Call the Child Maintenance Service

These are the contact details you need when dealing with the Child Maintenance Service (CMS) and other organisations in connnection with CMS cases.

For Current Child Maintenance Service Cases

Child Maintenance Telephone Number 0800 171 2345

Child maintenance Email Address UK  use correspondence@dwp.gov.uk 

Note the email address does not go direct to CMS, but via the DWP.

Alternative Child Maintenance Telephone Number:  0800 232 1956

The alternative telephone number is the Northern Ireland Phone Number.  Some people have found it easier to contact the CMS via the alternative number. 

If calling from overseas try dialing   00 44 800 171 2345 

                                                Or    00 44 800 232 1956

New Child Maintenance Cases

You have to go via Child Maintenance Options first.

www.gov.uk/child-maintenance

Subject Access Request (SAR)

To obtain your information that the CMS holds about you, a Subject Access Request or SAR needs to be made.  Never contact the CMS for a SAR.  Go direct to the DWP who handle the SARs.

Fill in the application form at:

https://secure.dwp.gov.uk/personal-information-request/name

You can apply for your information by post but it will take a lot longer.

Include a description of the information you want, and we suggest you give them a date from or to, to avoid being swamped with information.  

Any request needs to include:

·           Full address

·           Date of birth

·           National Insurance number

·           Your telephone number if you’re requesting call recordings

·           Your full name

If you want a copy of any call recordings they only keep them for around 14 months.  You must ask specifically for the call recordings.  If you dont ask, you will only get paper notes.

Post your written request to:

Right of Access Requests
Mail Handling Site A
Wolverhampton
WV98 2EF

Further Information

https://www.gov.uk/guidance/request-your-personal-information-from-the-department-for-work-and-pensions

 

Universal Credit

If you lose your job, you should sign on immediatly.  Do not wait for the P45.  You should also tell the CMS at the same time.

You will need to evidence the job loss to the Child Maintenance Service, by sending them a copy of the P45.

Universal Credit Telephone Number: 0800 328 5644

Welsh language: 0800 328 1744

Textphone: 0800 328 1344

Monday to Friday, 8am to 6pm

Find out about call charges

 

Department for Work and Pensions

If you have a complaint, you need to clearly mark it as a "Complaint"

Complaints and Correspondence Review Team

Post Handling Site B

WOLVERHAMPTON

WV99 2GY

DWP Complaint Email:  correspondence@dwp.gov.uk

 

Report Benefit Fraud

Receiving Parents:  If someone is claiming to not work, but also claiming universal credit you can report that to the DWP via the National Benefit Fraud Hotline.  This is not the telephone number for reporting child benefit fraud.  Thats via HMRC.

Benefit Fraud Telephone Number   0800 854 440

Textphone: 0800 328 0512

Or write to them at: 
National Benefit Fraud Hotline
Mail Handling Site A
Wolverhampton
WV98 2BP

https://www.gov.uk/report-benefit-fraud

Report to HMRC that someone is avoiding tax to pay less maintenance

Are they doing jobs cash in hand?  Not declaring income

Report via this website:  https://www.gov.uk/report-an-unregistered-trader-or-business

 

Our Suggestions to Help

Expect calls to take some time.  Hold times for CMS are horrific. 2hrs is quite normal.  So before you dial the child maintenance telephone number, we suggest you do the following.

1    Whenever we contact the CMS, the first thing I do is to put the kettle on, and boil some water to make a cup of tea / coffee.    

2.    Make sure before you dial, you have a toilet break.

3.   Have something to eat to calm your blood sugar down, and so you will less likely to be very annoyed with them.

4.    Have paper, pen, CMS reference number to hand.

There is much debate on social media about using the CMS portal. 

We recommend you use the portal as it sends information direct to your caseworker.  We understand that some people like to send recorded delivery letters, however there is a flaw to this.  CMS post is handled by a mail company who receive the letters you send and then have to scan them to the CMS.  That just makes it easy for something to go wrong.

If you use the portal it shows on your CMS file around 30 minutes later, and is visible to a caseworker.  With this in mind, I have in the past uploaded and then called the CMS, in the knowledge that my letter is with them at the point I speak to them an hour or so later.

You have to call CMS to get initial access to the portal as they dont by default send you a password.

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