Dividends Income and CMS

Dividends and Child Maintenance

Today, let's delve into a topic that might not be the usual dinner table conversation: dividends. While this subject might seem a bit niche, it's surprisingly relevant for both paying and receiving parents in the context of child maintenance. In this blog post, we'll break down the concept of dividends, discuss how they interact with the Child Maintenance Service (CMS), explore their tax implications, and provide some strategic insights. Demystifying Dividends To put it simply, a dividend is a share of a company's profit that is distributed to its shareholders. Companies make profits throughout the year, and dividends represent a portion of these profits given back to the shareholders. There are two types of dividends to consider: corporate dividends from large companies listed on the stock market and limited company dividends, often relevant to small business owners. Corporate Dividends and CMS For paying parents who receive corporate dividends, the initial calculation for CMS isn't affected. This is because HMRC (Her Majesty's Revenue and Customs) doesn't initially share dividend-related data with the child maintenance service. Dividends need to exceed a certain threshold (usually around £1,000 per year) before CMS takes them into account. However, if dividends surpass this threshold, receiving parents can request a variation to include them in the calculation. Dividend Tax Advantages For paying parents, dividends form part of taxable income, but there are scenarios where dividends might not be subject to CMS calculations. Dividends received through a pension or an Individual Savings Account (ISA) are not reported to HMRC, making them exempt from CMS. This presents an opportunity for paying parents to receive dividends tax-free through these channels. Understanding the Impact on Child Maintenance When it comes to CMS calculations, the number of children plays a significant role. For each pound earned, the CMS charges a percentage: 12% for one child, 16% for two children, and 19% for three children. If you contribute to a pension, the money you put in won't be subject to these charges, as it's tax-deductible. Dividend income within a pension is also CMS-exempt. Asking for a Child Maintenance Variation Dividends can be included in a child maintenance variation, however variations must not be speculative. An example of a speculative variation, is where someone asks for a variation for dividends, because their ex is self employed. That is speculative, as the self employed are not shareholders of a company, and only a company can pay dividends to shareholders. So asking for dividends for a self employed person will yield no dividend income, because they wont receive them from their self employment. If however they have a large share portfolio, in public listed companies, they may be included. Limited Company Dividends and Tax Advantages For those involved in limited companies, taking income in the form of dividends instead of a salary can have tax advantages. Dividend income is typically taxed at a lower rate compared to salaries. However, for receiving parents, it doesn't impact the CMS calculation. Regardless of whether the paying parent receives dividends or salary, the CMS calculation remains the same. Exploring Strategic Options There are several methods to extract income from a company: dividends, salary, and directors' loans. Directors' loans, though, can be tricky due to tax liabilities if not repaid within a certain period. For those looking to reduce tax and CMS, the dividend route seems promising. By paying dividends and contributing to a pension, you can lower your taxable income and, subsequently, your CMS payments. Corporate Dividends and CMS For paying parents who receive corporate dividends, the initial calculation for CMS isn't affected. This is because HMRC (Her Majesty's Revenue and Customs) doesn't initially share dividend-related data with the Child Maintenance Service, so child support is not affected. Dividends need to exceed a certain threshold (usually around £1,000 per year) before CMS takes them into account. However, if dividends surpass this threshold, receiving parents can request a variation to include them in the calculation. Conclusion Dividends might not be your typical topic of conversation, but understanding their implications in the realm of child maintenance is essential for both paying and receiving parents. Remember, the information shared here is meant to provide insight and general knowledge. Always do your research or seek professional advice before making financial decisions. If you found this post helpful, consider subscribing to our channel for more informative content. We tackle various child maintenance-related topics to empower both parents with the knowledge they need. Thank you for your time, and remember – understanding your circumstances and making informed choices is key.

#Dividends

#ChildMaintenance

#FinancialPlanning

#CMS

#TaxSavings

#DividendIncome

#PensionPlanning

#FamilyFinance

#LimitedCompany

#CorporateDividends

#HMRC

#ChildSupport

#ISA

#PayingParents

#ReceivingParents

#TaxExempt

#DirectorsLoans

#SmartFinances

#IncomeStrategy

Late or Missed Payments

 
#childsupport #CMS #childmaintenance #childsupport2023 What happens When the Child Maintenance Service Are Told Payments Are Late

Hello, how are you doing my name's Keith and I'm a dad, and I pay child maintenance through the Child Maintenance Service. So I thought today, I would talk to you about what happens when someone reports that you haven't paid, and what happens next. In order to report a missed payment, the CMS system does not allow reporting of missed / late payments until three working days have passed. This changed in November 2023. Prior top that it was a minimum of 5 working days. So if you're due to pay on a Friday, then the following Wednesday, if you haven't paid it can get reported, so if you're paying parent you can make after 3 working days. What happens next is the CMS will send a text message to the last known phone number that they have, and it will say, somewhere along the lines of, it's been reported that you haven't paid Child Maintenance please contact them so what do you do next. The paying parent must not avoid responding. If they do, it may simply be considered as beign non complient leading to Collect and Pay. Also the trouble is if you ignore it automated systems may mean that something may happen anyway, so what experience tells me with CMS that essentially you have to make a response and that response needs to be done normally within 14 days so what what you should actually do if you are a paying parent is respond within 14 days and obviously the quickest way to do that is via the portal. I do appreciate though that some people refuse to use the portal but what I would say is if you use the portal it goes directly to your CMS account and therefore it goes directly to the person dealing with it. If you send evidence by post it could get lost in the post, but also all post that goes to CMS does not go directly to CMS, it goes to a mail handling centre, which is run by a private company. I'm not quite sure of the process but I believe at that point they scan your mail into the CMS computer system and obviously it gets allocated to a case and of course if you don't send information that identifies who you are, t's possible that they will get it but they won't be able to match the information to to you. Maybe because you've not put your reference number on there or maybe because your name's John Brown and there's 15 John Brown's, but you've not given your address so that's why I always say use the portal and for those who use the portal you go to the portal and you're essentially complete an online form. So you know all that I'm aware that there are some people out there that have this happens to them quite often, so I presume if they're not already doing this they do this, you just go online you fill out the form and it will say on there you haven't paid from such and such a date it will then list your payments. You then type in how much you've paid and you press submit then you need to back that up with supporting information. This is the time where you take a photograph of your bank statement and you upload it to the portal obviously the portal takes certain file types jpegs PNG files which are the normal files that you use for sending pictures, so you can send the pictures you can do this from your mobile phone you don't need to sit next to a computer and then of course at some point someone from CMS will look at this and make a decision. I personally would challenge and keep on challenging until I get an answer so if I'm accused of not paying, then clearly I would submit the information as quickly as possible to prove it, I would then probably follow that up with an email now obviously the CMS normally don't have emails but you can always email the child maintenance Service via the Department for Work and paensions. The email address fo child maintenance is correspondence@DWP.GOV.UK There are other email addresses that float around but that's the one I suggest you do because at least then it's going to the Department of Work and Pensions and they deal with it from there. For those who don't know the Child Maintenance Service (CMS) is a part of the Department of Work and Pensions, but personally I'd rather an email go to someone in the DWP bit so that they deal with it then the CMS Direct and that's it. Within 14 days it should be done. Now my recommendation is this if this keeps on happening to you, this is a form of financial abuse so if you find you are regularly being asked to pay prove that you've made a payment and you've made those payments report it, report to CMS when you upload your evidence upload a letter and ask them to record on your account that you are being financially abused and that your ex does this from time to time. Chapters: The video above has been split into chapters as follows. 00:00 Introduction 00:48 What Happens Next? 03:14 Evidence Your CMS Payment 05:53 Summary

Scrap Collect and Pay Fees

 Child Maintenance Service Collect and Pay Fees

#childsupport #cms #childmaintenance

Did you know parents that pay child maintenance through the Child Maintenance Service Collect and Pay service are charged a 20 percent fee, none of which goes to the children, that is wrong. Stop the fee, stop it now. Roughly 90 per cent of all CMS cases involve a man paying his ex female partner child maintenance. Where the CMS use the Collect and Pay method, the paying parent is charged a 20% fee. The receiving parent is also charged a fee, but that is set at 4%. There is a clear discrimination here. 90 per cent paying are male and are charged 20% 90 per cent of people receiving are female, and are charged 4% This is therefore a form of discrimination. It is of no consequence that 10% of payers on collect and pay are female. What is important is that the majority of payers are male and they pay 20%, where as the majority receiving are female, yet they pay 4%. The fee for collect and pay needs to be abolished, or at least to be equal.

Remember, none of the fees reach the child.

This is How Much CMS Make From Parents So the paying person is paying £120 per week. The receiving parent only receives £96. The Child Maintenance Service keeps £24. Over 1 year (52 weeks), the CMS gross profit is £1248. Our Advice CMS procedure is that after 6 months of being on Collect and pay, the paying parent may swop to Direct Pay, but before that happens they have to pay a further 6 payments by direct debit. We suggest paying parents contact the CMS, at the 6 month point and ask to go to Direct pay. Its better to pay a further 6 months in fees, then to reject the move to direct debit, only to still, pay six months of direct debit at a later date. We also advise that paying parents complain to the CMS about indirect sexual discrimination in relation to how the fees are applied. Should anyone be able to take this further by legal means, please get in touch. Links

Buy me a coffee please! Please support via Paypal Facebook: Join The Facebook Group You Tube: CMS Videos That May Help Amazo: Read Our Book Via Amazon Kindle

Tax Years and CMS

Lets discuss the topic of CMS and the latest available tax year. While this might not be the most thrilling subject, I've noticed numerous online posts expressing confusion about CMS using the 21-22 tax year instead of the 22-23 tax year. Let's clear up this confusion.

But first, here is a related video.   

The CMS regulations mandate the use of your most recent taxable income figure as provided by HMRC. However, it's essential to understand that "latest available" doesn't necessarily mean the most recent tax year. Allow me to explain. For instance, even if today is in June, CMS might not be using your tax year that concluded on the 5th of April. There are a few reasons for this. If you're someone who does self-assessment, your tax return isn't due until January 31st. Even if you submit it earlier, HMRC's processes are geared towards finalizing tax years after the January 31st deadline. Consequently, the tax return might not be accessible before that date. This explains why CMS might use your 21-22 tax year in most instances, especially if you're a self-assessment taxpayer. If you're not involved in self-assessment and are a standard employee with no additional income sources, your tax year ends on April 5th. This means you'd expect to be billed for the 22-23 tax year in 2023. However, it's not this straightforward. The key is the latest available tax year from HMRC, and this isn't necessarily the tax year that just ended. For example, employers have to produce P11D forms, which contribute to your taxable income. However, their deadline isn't April 5th; it's typically later in June or possibly July. Consequently, there's a window of several months where your latest available tax year isn't the one that just ended. So, if your annual review is in June, you might be billed based on the 21-22 tax year. If we're in August, then the billing should shift to the 22-23 tax year. This shift in billing depends on whether you're a regular taxpayer or a self-assessment taxpayer. Keep in mind that CMS uses the latest available tax year from HMRC. This doesn't necessarily coincide with your most recent tax return submission, as HMRC's processes could still be ongoing. Unfortunately, there's no way to correct this on your own. Sending in your most recent tax return won't help, and it might even work against you due to tax thresholds. So, you'll need to accept the situation and remember that in a year's time, CMS will base their calculations on the next tax year. To clarify a couple of points, the tax year spans from April 6th to April 5th. Additionally, CMS relies on tax years because they provide a consistent view of income, avoiding wild fluctuations. Whether you're a seasonal worker or not, CMS aims to maintain income consistency for both parents involved in payments. To sum up, the most recent tax year used by CMS is the one supplied by HMRC, not necessarily the most recent one you've filed a tax return for. If you've filed your tax return early, hoping to skip a year, that strategy won't be effective. Conversely, if circumstances are the other way around, you won't pay a higher amount immediately, giving you time to save. I hope this explanation clarifies things. Have a pleasant evening and take care. Goodbye!

Stop CMS When Child Quits Education?

 Introduction

Good morning! I produced the video below in June 2022, but its still relevent today. During the summer months, many parents are grappling with the decision of whether to continue making child maintenance payments, especially now that some children have completed college and are either starting jobs or heading off to university. The answer to this question isn't entirely straightforward; it depends on a few factors that I'll explain, in the article and the video.

The Importance of Child Benefit Cut-Off Dates

To shed light on this matter, it's essential to grasp the significance of the child benefit cut-off dates. Suppose a child has been in education and has recently finished exams, perhaps around mid-June. In that case, the child benefit agency will continue to provide child benefit payments until September. Consequently, child maintenance payments will typically follow this timeline and be cut off around the same time. This practice is rooted in the observation that many students often return to college for further studies or take time to figure out their future path.

The Four HMRC Child Benefit Cut-Off Dates

Here's a piece of information that often escapes notice: child benefit has four cut-off dates throughout the year.

    28/29th February

    31st May

    31st August

    20th November. If these dates are a Sunday Child Benfit Stops. If not, it continues to the following Sunday which will be at the beginning of the next month.

So, let's get to the crux of the matter: if your child concludes their education before June and starts a job, child benefit should have ceased by 31st May, or a few days after. Conversely, if they finish their education after June 1st and subsequently become unemployed, child benefit will continue until the end of August with potentially covering the period up to around September 6th of the same year depending on when the first Sunday is from 31st August.

A Real-Life Example

Allow me to illustrate with a recent case I handled. In this scenario, a child completed their education in April, and the Child Maintenance Service was informed of this in May. However, the service still insisted on receiving child maintenance payments, citing the ongoing child benefit payments. A swift contact with the child benefit agency clarified matters. As it turned out, since the child had left education in April, child benefit should have completely stopped by June 1st. This clarification swiftly resolved the case.

Takeaway: Know the Cut-Off Dates

To sum it up, if your child wraps up their education before June and enters the workforce, the Child Maintenance Service should cease payments from June 1st. This is because child benefit payments should also have ceased. If, on the other hand, they leave education after June, the next crucial cut-off date is around September 4th or 5th.

Conclusion

I hope this explanation has shed light on the often-confusing issue of child maintenance payments. It's important to understand the interplay between child benefit cut-off dates and child maintenance payments to ensure that both parents and children are on the same page. Remember, if your child concludes their education before June, their path into the workforce should also mark the end of child maintenance payments. For those finishing education after June, expect child maintenance to continue until around September. If you have any more questions, feel free to reach out. Have a wonderful day, and I'll catch you later. Cheers!

Child Benefit and Child Maintenance

Navigating Child Benefit and Its Impact on the Child Maintenance Service

Child Benefit and Child Maintenance Whether you're a parent, grandparent, or caregiver, understanding the ins and outs of child benefit and its connection to the Child Maintenance Service (CMS) can prove to be invaluable. In this post, we'll delve into the qualifying criteria for child benefit, debunk some common misconceptions, explore the nuances of the former 50k rule, now 60K as of 2024. Shed light on terminal dates, and address the intriguing interplay between child benefit and CMS, where the CMS use the payment of child benefit to presume the primary carer. So, without further ado, let's dive into this essential topic.

Qualifying for Child Benefit: Child benefit is a financial support system designed to assist parents and caregivers in raising children. It's not solely limited to biological parents; even grandparents, foster parents, and adoptive caregivers can claim child benefits. One key aspect to remember is that only one individual can claim child benefit at any given time, for one child. Traditionally, it has often been claimed by mothers, but recent developments challenge this norm.

Dispelling the 50k Rule Misconception: The so-called "60k rule" concerning the clawback by tax of child benefit, has caused confusion for many. Contrary to popular belief, earning over 60k does not automatically disqualify you from claiming child benefit. The rule, introduced a few years ago, stipulates that if your income exceeds 60k but remains under 80k, a portion of the child benefit may need to be repaid. However, this doesn't mean you can't claim it. There's a third option: you can claim child benefit but opt not to receive it. By choosing this route, you avoid having to repay the benefit.

Terminal Dates and the School Calendar: Child benefit payments follow specific terminal dates throughout the year – end of May, August, November, and February. These dates may seem tied to the school year, but the connection isn't as straightforward as it seems. For instance, even if your child finishes school in May, child benefit continues until the end of August if they're still involved in educational activities. College attendance and changes in education status can impact when child benefit payments cease. Its slightly complicated further as Child Benefit is paid in weekly blocks, so although the 31st August is a Terminal Date, the Child Benefit will finish on the first immediate Sunday. So if the 31st August was a Friday, the Child Benefit would be payable for a further two days to cover the Child Benefit week which is Monday to Sunday.

Child Benefit and CMS: A Complex Interaction: While child benefit and CMS are interconnected, they operate on distinct criteria. CMS, based on shared care, calculates payments considering the child's overnights with each parent. Child benefit, however, focuses on day-to-day care. This creates a potential conflict, as one party might be receiving child benefit while CMS deems the other parent as the primary caregiver due to overnight arrangements.

The Intriguing Grandparent's Loophole: An interesting loophole emerges when a child who is already receiving child benefit has a child of their own. If the original recipient's circumstances change, their CMS payments may stop. However, if another relative, such as a grandparent, claims child benefit for the grandchild, CMS payments might continue despite the original recipient's change in circumstances.

Ethical and Legal Responsibility: It's essential to approach child benefit and CMS with honesty and responsibility. If your circumstances change and you're no longer eligible for child benefit, it's both morally and legally imperative to report this change to HMRC. Failing to do so can lead to serious repercussions down the line. Remember that any child maintenance paid based on inaccurate information might need to be repaid.

Change of Carer: It is common for there to be a change of carer reorted to CMS. Equally it is also common for the change of carer to be rejected due to a challenge or a lack of evidence. CMS used the payment of Child Benefit to evidence the pruimary carer. So if that changes, the records with the Child Benefit Agency need to reflect the change. Therefore where parents change from being carers, the new primary carer must make an application to the Child Benefit Agency to claim the Child Benefit. If they dont its highly likely that the CMS will reject the change. In my own experience, when both parents stated the child was not in education, CMS still ran a child benefit check, and would not initially stop the CMS payments due to Child Benefit being paid, even though both parents said the child had ceased to be in education.

Conclusion:

Understanding the intricacies of child benefit and its relationship with the Child Maintenance Service is crucial for any parent or caregiver. Whether you're clarifying the 60k rule, navigating terminal dates, or pondering the ethical implications of claiming child benefit, being well-informed empowers you to make the best choices for your family's financial well-being. As regulations and laws continue to evolve, staying up-to-date with the latest information ensures you're equipped to make informed decisions.

We hope this blog post has shed light on the complex yet vital topic of child benefit and its impact on the Child Maintenance Service. If you have any questions or insights to share, feel free to leave a comment below. And if you found this post helpful, remember to like, subscribe, and share it with others who might benefit from this information. Thank you for joining us on this journey of understanding child benefit and CMS. Wishing you all the best in your parenting and caregiving endeavors! For clarity, this post relates to the Child Maintenance Service and the payment of Child Benefit in the United Kingdom. Further Information: Child maintenance can be a complex topic to navigate, especially when it comes to understanding what it covers and what it doesn't. If you're new to this blog, don't forget to join us on Youtube. Out Youtube Channel can be subscribed to at: https://www.youtube.com/channel/UCmKdH63SQdlSqqFwkc4hAKQ?sub_confirmation=1 Please like and subscribe to receive future videos on similar topics right in your YouTube inbox. This article was updated in 2024 due to the government changing the 50K threshold to 60K.