Child Support When Moving Abroad

Child Support and Moving Overseas

Its a common question.  "Do I have to pay child maintenance if I move abroad?  

Heres the answer for some:

The Child Maintenance Service will not reduce the child maintenance you pay if:

1.     You move overseas for less than 12 weeks.
2.     You are serving in HM Armed Forces or employed by the UK Government.
3.     You are paid in the UK, for working overseas, but regularly return to a UK primary address.

And for the rest of you, continue reading!

Changing Your Address

Just changing your address with the Child Maintenance Service will not mean you will no longer have to pay, nor will it automatically close a CMS case.  If you leave the country without speaking to the Child Maintenance Service, the child support assessment will continue, and the CMS may even take action to enforce the collection of child maintenance.

The Child Maintenance Service, will not accept your statement that you are overseas unless you can evidence the fact.  The CMS will have to assess if you are habitually resident in the UK, and to do this they will have to consider:

    a.    Your length and continuity of residence in the UK.

    b.    The length and purpose of any absence from the UK.

    c.    Your reasons for leaving the UK.

    d.    Your future intentions.

    e.    The nature of your work

    f.    Where your centre of interest lies, and

    g.    Whether you have a substantial connection with a place.

So what does this mean.  Well if you cut all ties and leave the UK with your family, and have no intent to come back, your maintenance will stop.  If you are working for a few months, returning home to see partner and children frequently, it wont stop.

How Can I Prove I Am Moving Overseas

    a.    Deregister as a UK tax payer via HMRC

    b.    Stop payment of any DWP benefits 

    c.    Remove any lines of credit.  In other words, pay off overdrafts, loans and credit card debt.

    d.    End your tenancy or sale your home.  If you are going to rent it, you will need to complete the HMRC forms for persons renting property but living overseas.

    e.    Provide evidence of an overseas residency permit

    f.    Provide evidence that you are living abroad, such as a tenancy agreement

The REMO Reciprocating Countries List

Reciprocal Enforcement of Maintenance Orders (Known as REMO), is a process where maintenance can still be claimed from you, via an overseas court.  This is not a CMS process, but is mentioned as living in a REMO country can still lead to a court application for child support.  It is not administered by the Child Maintenance Service.

The following countries are subject to REMO

Country	Country	Country
ALBANIA	CYPRUS	MONTSERRAT
ALGERIA	CZECH REPUBLIC	MOROCCO
ANGUILLA	DENMARK	NAURU
ANTIGUA	DOMINICA	NETHERLANDS
AUSTRIA	ECUADOR	NEW ZEALAND (Will trace)
AUSTRALIA (Will trace if the Territory is known)	ESTONIA	NIGER
AUSTRALIAN CAPITAL TERRITORY	ESWATINI (FORMRLY SWAZILAND)	NIGERIA
COCOS (KEELING) ISLANDS	FALKLAND ISLANDS & DEPENDENCIES	NICARAGUA
NEW SOUTH WALES	FIJI	NORFOLK ISLAND
NORTHERN TERRITORY	FINLAND	NORWAY
QUEENSLAND	FRANCE	PAKISTAN
SOUTH AUSTRALIA	GAMBIA	PAPUA NEW GUINEA
TASMANIA	GERMANY	PHILIPPINES
TERRITORY OF CHRISTMAS ISLAND	GHANA	POLAND
VICTORIA	GIBRALTAR	PORTUGAL
WESTERN AUSTRALIA	GREECE	ROMANIA
BAHAMAS	GRENADA	ST CHRISTOPHER (KITTS) AND NEVIS
BARBADOS	GUATEMALA	ST HELENA
BELIZE	GUERNSEY	ST LUCIA
BELARUS	GUYANA	ST VINCENT
BELGIUM	HAITI	SERBIA
BERMUDA	HOLY SEE	SEYCHELLES
BOSNIA AND HERZEGOVINA	HONDURAS	SIERRA LEONE

• BOTSWANA	HONG KONG	SINGAPORE
  BRAZIL	HUNGARY	SLOVAKIA
  BRITISH SOLOMON ISLANDS	INDIA	SLOVENIA
  BRUNEI	IRELAND – The Republic of	SOUTH AFRICA
  BULGARIA	ISLE OF MAN	SPAIN (includes the Canary Islands)
  BURKINA FASO	ISRAEL	SRI LANKA
  CANADA (Will trace if the province is known)	ITALY	SURINAM
  ALBERTA	JAMAICA	SWEDEN
  BRITISH COLUMBIA	JERSEY	SWITZERLAND
  MANITOBA	KAZAKHSTAN	TANZANIA (Except Zanzibar)
  NEW BRUNSWICK	KENYA	TRINIDAD AND TOBAGO
  NEWFOUNDLAND AND LABRADOR	KIRIBATI	TUNISIA
  NORTHWEST TERRITORIES	LATVIA	TURKEY
  NOVA SCOTIA	LESOTHO	TURKS AND CAICOS ISLANDS
  NUNAVUT	LITHUANIA	TUVALU
  ONTARIO	LUXEMBOURG	UGANDA
  PRINCE EDWARD ISLAND	NORTH MACEDONIA	UKRAINE
  SASKATCHEWAN	MALAWI	UNITED STATES
  YUKON TERRITORY	MALAYSIA	URUGUAY
  CAPE VERDE	MALTA	VIRGIN ISLANDS
  CAYMAN ISLANDS	MAURITIUS	ZAMBIA

Tax and the Child Maintenance Service

Income Tax and The Child Maintenance Service

Understanding Child Maintenance and Income: A Comprehensive Guide

Introduction Today, we're going to delve into an important topic: income, specifically taxable income and how it relates to child maintenance. Child maintenance is a critical aspect of ensuring that children receive the financial support they need, particularly when parents are no longer together. In this blog post, we'll explore how income, specifically taxable income, plays a central role in child maintenance calculations and shed light on some essential considerations.

The Transition to the 2012 Child Maintenance Scheme

Child maintenance in the United Kingdom underwent a significant change in 2012 with the introduction of the Child Maintenance Service (CMS). Before this change, the old Child Support Agency existed, and child maintenance calculations were based on deductions from the parent's income. In contrast, the 2012 scheme shifted the focus to using HMRC taxable income. This change was primarily aimed at simplifying the calculation process. Why HMRC Taxable Income? The CMS relies on HMRC (Her Majesty's Revenue and Customs) taxable income because it offers a straightforward way to determine a parent's income for child maintenance purposes. HMRC receives income information from various sources, making it a comprehensive and reliable reference. Here's how it works: For Employed Individuals: If you have a job and receive a regular paycheck through payroll, your tax information is automatically reported to HMRC by your employer. The CMS can easily access this data to determine your annual taxable income. For Self-Employed Individuals: If you're self-employed and file self-assessment tax returns, HMRC receives your income information through this process. This includes details of your earnings and expenses. Special Cases: There are exceptions, such as income from dividends, which HMRC may not initially provide to CMS due to specific tax regulations. However, the receiving parent can request that these dividends be taken into account, provided they can justify the request. Understanding Taxable Income It's important to note that your taxable income reported to HMRC includes various components: Job-Related Income: This is the income you earn from your regular job, and it is reported by your employer on your P60 form. Self-Employment Income: If you're self-employed, your income from self-assessment tax returns is included. Interest Earned: Interest earned from bank accounts and savings is also part of your taxable income. Exemptions and Unreported Income Here's an interesting aspect: CMS calculations are based on gross taxable income. This means that any income that is not taxed at the source and not reported to HMRC will not be factored into the calculation. Common examples of such income include: Rental Income from a Room in Your Home: HMRC allows individuals to earn up to £7,500 per year tax-free from renting a room in their home. This income doesn't need to be reported to HMRC, and therefore, it won't affect your CMS calculation. Other Non-Taxed Income: Various sources of income, like lending money to a friend and receiving interest or certain investments, may be exempt from income tax and therefore not reported to HMRC. Rental Income from Private Properties: If you're a landlord, you're required to declare rental income to HMRC, and it will be included in your taxable income. The Role of the P60 You may wonder if your CMS calculation is solely based on your P60, which is an end-of-year tax document provided by your employer. While the P60 does contribute to your CMS calculation, it's not the only factor considered. CMS takes into account all taxable income sources, not just job-related income. The Importance of the Most Recent Tax Year The tax year and its timing can sometimes lead to confusion. For example, if you're self-employed and your tax return is due in January, your most recent available tax year for CMS purposes will be the one before the current tax year. It's essential to clarify which tax year CMS is using for your calculation. Conclusion In summary, understanding how income relates to child maintenance is crucial for both paying and receiving parents. The CMS relies on HMRC taxable income to determine child maintenance obligations, and this includes various income sources. Knowing which income is exempt from taxation and unreported to HMRC can impact your child maintenance calculation. Additionally, keep in mind that your CMS calculation considers all taxable income sources, not just your P60. If you found this information helpful, please consider liking and subscribing to stay updated with future posts. If you have any questions or specific topics you'd like us to cover in more detail, feel free to leave a comment. For more comprehensive information and discussions related to child maintenance, consider joining our Facebook group, where you can connect with others facing similar situations. Thank you for taking the time to read this post. We wish you all the best in your child maintenance journey. Have a great day! Buy me a coffee please! Please support via Paypal Facebook: https://www.facebook.com/groups/197227785636347 Blogspot: https://childmaintenancehelp.blogspot.com/ Amazon: https://amzn.to/3EyVAue

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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.

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