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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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

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