2023/12/13

Suggested Books To Buy

New To The Child Maintenance Service

If you are currently splitting from your partner, you will probably have friends giving you lots of advice. 
 


Those friends may feel they are being helpful, but you are probably better off taking the time to do your own research rather than rely on the mate down the pub, or someones comments on facebook.  This will prepare you for when you eventually speak to a solicitor.

As you would expect, a book is no substitute for good legal advice, however a book does allow you to read up on matters, and therefore prepare questions for your solicitor, in order to make appointments as cost effective as possible.

One of the best ways to get e books cheaply is via Amazon. using their Kindle Service.  You dont need a Kindle to read a Kindle book, just a PC, laptop, phone or tablet.  

Ebooks have several advantages over print media.  For example an ebook downloaded from Amazon, can be delivered straight away to your device, will often be cheaper, and it can be updated after you download it with more content.

Amazon run a subscription service for books called Kindle Unlimited which costs £7.99 per month.  You can normally get a free 30 day trial of the service.

This therefore makes it perfect for downloading books.

Here are some suggestions.

Amazon Kindle 30 day trial 





















Work Pensions and CMS

Pensions and Employment


If you are offered a work pension scheme, and your employer contributes to it, it is almost certainly a good deal.  After all its free money, and the response of most people is to take as much of the free money in matched pension contributions as possible.  But generally people dont put in more than that.  Lets face it, pensions are not exciting, and there are more demands upon your money.  However there is one time when you should consider putting more into a pension and that is when you have children, particularly if you are making contributions to child support in the UK, using the Child Maintenance Service.

Why Invest in a Pension

The are several reasons to invest in a pension.  Pensions allow you to save for your retirement.  If you die, before you start taking the pension, it may be passed to your beneficery outside of your estate.  However as this blog concerns child maintenance lets look at how pension contributions affect child support calculations.


There are six steps to a CMS calculation.  The first step is to take your annual income, using HMRC records for a particular tax year.  We will use the 22/23 tax year as an example.


The next step is to deduct from the annual income any special expenses payments, such as for travel, and also deduct any pension contributions.  In doing so, the annual income is reduced.

Example 1

Someone earnt £30,000 in the 22/23 tax year.  They then paid £3600 in pensions via an employers scheme, equivalent to £300 per month    

CMS contributions are discounted from the gross income.  In this case, the effect of this is to reduce the salary from £30,000 to £26,400.  From this point the CMS calculation starts to come together.  

In this case, the pension was made through an employers scheme.  Which in the majority of cases, means the income for the year reported to HMRC is after the deduction. 

So HMRC record a total income of £26,400.  And CMS base their income calculation on £26,400.   CMS are not aware of the pension contribution, and they do not need to be told about it, as the pension has been removed from the income.

When you look at the child maintennace Portal it is normal for it to say £zero pension contributions, when you pay via a workplace scheme.  An explanation for that is here.

https://youtu.be/bowRzEem1aA

What if my contributions are not reducing my CMS

However, there is a flaw with employer contributions.  Some employers take the pension contributions, after deduction for National Insurance and Tax.  So they are made from Net pay.  This means that the deductions are not automatically reduced from the CMS calculations.  In order to get them reduced you will need to send them the evidence of the pension contributions, ie the pension statement, which is produced at the end of the tax year.

This also means, that when the paying parent looks at the CMS website or their paperwork it will show as £ zero pension contributions.  This is correct.  

Example 2

Someone earnt £30,000 in the 22/23 tax year.  They then paid £3600 in pensions via an employers scheme, equivalent to £300 per month    

CMS contributions are not discounted from the gross income  In this case, the gross salary has not been reduced, so it is reported that the employee was paid £30,000.   

In order to get it reduced, the employee has to send the pension statements in after the tax year ends.

Common Questions.

a.    If I pay 26% all more of my salary into my work pension, will it reduce my CMS each month due to the 25% rule?

No and yes!  It will, but not in the same tax year.  If you ask CMS to reduce due to breaching the 25% threshold, they will ignore your pension contributions.  So by paying more than 25% you will receive 25% less pay, and you will have to still pay CMS on the full income.  But all is not lost.

The increased pension contributions will reduce your CMS calculations in a future year, when that tax years income, less pension contributions is used to calculate the liability.  

So if in the 22/23 tax year, you pay 25% or more into a pension, when that tax year is used, in either 23/24 or 24/25 tax years, you will pay 25% LESS!


b.    What about private pensions?

Private pensions are covered here at:  
How The Child Maintenance Service Treat Private Pension Contributions


c.    If I get a payrise, will the CMS take more money off of me?

Yes they will, when that tax year is used for your calculations.  However if you pay the payrise into a pension, the pay rise is effectively cancelled out.  


Disclaimer:  None of this article, or any other article should be considered to be independent financial advice.  The opinions expressed are based on experiences dealing with the Child Maintenance Service on child support issues.  Legislation may change the validity of the examples and information.






2023/12/12

Shared Care and Child Maintenance

Shared Care and Child Maintenance




When a parent makes an application to the Child Maintenance Service they calculate the amount due, using a formula that depends upon a number of factors such as the number of children, the paying parents income and how many other children the paying parent may have.


They then discount that amount to cater for shared care.  Shared care is where the paying parent shares some evening care responsibilities.

For each night on an average week, a paying parent is expected to have the children they take off 1/7th or about 14%.  They have to estimate, based on patterns, or if a court order exists, they base the discount on that.

You do not need to have a court order to prove shared care.  A regular pattern can be used as evidence.  For example if a child stays with the paying parent every Friday and Saturday night, it will be assumed that over the year they will stay with them 54 times.

This qualifies as a 2/7ths discount or a 28% reduction in maintenance to pay.  

The formula is set in legislation, meaning that it cant be changed by the CMS.  It is generally considered that where the child is sleeping at midnight determines where they are being cared for.  

Shared Care Breakdown

  • 52 to 103 nights per year equals a 1/7th reduction.
  • 104 to 155 nights per year equals a 2/7ths reduction.
  • 156 to 174 nights per year equals a 3/7ths reduction
  • More than 175 nights equals a 50% reduction and an extra £7 per week reduction for each child in the band.

It is therefore very important that both parents are aware of the shared care discount as it will affect the money.

Where parents are in dispute, the CMS will make a decision which is normally based in favour of the parent with care.  (This is because it is rare for a parent with care receiving money to say they have a child less than the paying parent states).

For example if the paying parent says the child stays for three nights, and the other parents states one night, they will grant one night shared care, as both parties have agreed its at least one night.  However its possible to argue this and overcome the issue, by appealing using the Mandatory Reconsideration process.

What About Day Care?

The CMS do not take daycare into account.  If the child stays with the receiving parent every night, but is looked after by the paying parent all day, the paying parent has to pay 100% of the child support maintenance due. 

However day care is important when dealing with HMRC concerning child benefit.

What About Other Discounts?

The amount of child maintenance charged can also be reduced by taking into account pension contributions, special expenses and other children.  

  • To see how child support payments can be reduced for pensions, click here.
  • To see how child support payments can be reduced for expenses, click here.
  • To see how child support payments can be reduced due to other children, By clicking here..

Example

A child stays with the paying parent from Saturday morning, until 9pm on the Sunday.  They then sleep at the other parents house.  In this example, the child only sleeps at the house for one night, so only one night of shared care is discounted.  It may be two days, but only the nights count.

Summary

The Child Maintenance Service formula for calculation of child support is set by parliament, so cannot be deviated from  Its has many aspects, but the most important is shared care.  One night shared care per week, can reduce child maintenance by 14%.

Further Resources

Child Maintenance A Guide for Parents 

Useful Links

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