Child Support payment query/advice please

meldrew66

Does anyone have any experience of CMS (Child Maintenance Support) calculating the amount of child support/maintenance a father should pay? My daughter’s partner with whom she has 2 boys, has another child by a previous girlfriend. He and his ex have had an informal monthly child support agreement for the past 8 years, paying £160pm, but he has now had a letter from CMS (presumably prompted by his ex seeking to get more money out of him) which states that, based on his company drawings of £12000pa he should pay £120pm. Here’s the thing. He takes a £4000 monthly dividend from the company so his real, total ‘income’ is £60,000. His published accounts only include the balance sheet so there is nothing in the public domain about the dividends.

Do/should (unpublished) dividends count towards the amount of ‘income’ CMS should be basing their calculation of the monthly child support payments  he should be making? His ex is bad news on many levels and he more than contributes in many ways towards the support and upkeep of his eldest child, including having him stay with them more than 52 days per year and taking them all on annual holidays so he’s not someone who is being ‘tight’; it’s more about ensuring his rights are being respected plus they want to do things by the book and not have something that might ‘bite them in the bum’ in the future. Thanks in advance for a comments, feedback or suggestions.

valleynick66

I would imagine they have access to his ‘tax’ details and in which case they will know (or can learn) his true income. 

Charlton and on

He paid £160 a month and now has to pay £120?

Either way, it costs more than that to raise a kid.

meldrew66

valleynick66 said:

I would imagine they have access to his ‘tax’ details and in which case they will know (or can learn) his true income. 

…..as neither the drawings nor dividends are published in his micro accounts (it’s a balance sheet only because theirs is a small business) not sure how they even know about the £12k which they’ve quoted in the letter. If you’re right, that does suggest dividends are NOT included in their income calculation?

valleynick66

meldrew66 said:

valleynick66 said:

I would imagine they have access to his ‘tax’ details and in which case they will know (or can learn) his true income. 

…..as neither the drawings nor dividends are published in his micro accounts (it’s a balance sheet only because theirs is a small business) not sure how they even know about the £12k which they’ve quoted in the letter. If you’re right, that does suggest dividends are NOT included in their income calculation?

Well his income is obviously known to the tax man via his tax returns so can’t be denied if challenged. 

This article shows a calculation with examples but does say the other parent can ask for other income to be considered even though dividends are initially ignored:

https://www.gingerbread.org.uk/find-information/money/child-maintenance/using-cms/#:~:text=The%20CMS%20uses%20the%20paying,ignored%20in%20the%20initial%20calculations.

meldrew66

Charlton and on said:

He paid £160 a month and now has to pay £120?

Either way, it costs more than that to raise a kid

……indeed. He contributes financially in other ways. He lives in a council house. She has 3 kids by 3 separate men, is with a rich guy now and she personally owns 2 houses and is fraudulently claiming benefits so please don’t be judgemental. He’s not trying to pay less than he currently does.

swords_alive

Found this from a google using search term keywords- 'cms "dividend" income calculations' 

from https://cmsas.com/2023/03/07/are-dividends-included-in-child-maintenance-calculations/

All taxable income, including dividends, is included in child maintenance calculations. Our blog explains what you need to know to avoid legal consequences.

It’s a common question we hear from our clients, “Are dividends included in child maintenance calculations?”. The simple answer is yes, all taxable income is included in a child maintenance calculation. However, the Child Maintenance Service receives information about your income from HMRC and typically, it will only include your PAYE salary as taxable income.

If the CMS fails to include dividends received from a company, typically as a director or shareholder would be remunerated in addition to a salary, then the onus is on the individual to update the CMS so that their income is recorded correctly.

Failure to do so, can result in arrears (and these can be significant, if the typical low salary, high dividend remuneration is received), and failure to pay these on demand can result in a move from Direct Pay to Collect & Pay, and can escalate to a Deduction from Earnings Order. Continued failure to pay can result in the revocation of your driving licence and/or passport, and in extreme cases, a prison sentence.

eaststandmike

meldrew66 said:

valleynick66 said:

I would imagine they have access to his ‘tax’ details and in which case they will know (or can learn) his true income. 

…..as neither the drawings nor dividends are published in his micro accounts (it’s a balance sheet only because theirs is a small business) not sure how they even know about the £12k which they’ve quoted in the letter. If you’re right, that does suggest dividends are NOT included in their income calculation?

If he is taking a dividend that means he is a shareholder and possibly a director. This information is easy to find out. He is drawing 12k per annum so he pays very little tax on this amount via PAYE. He will need to pay tax on the dividend drawings which is a higher rate so once again this will be in the system somewhere.

He can take a chance and keep his head down but if they dig deeper and find out they could go after him for back payments 

AndyG

They have always been a nightmare!! I got divorced 20 years ago and it was very amicable. My ex kept the house and I paid 100% of everything for our 2 kids and they stayed with me every weekend. After 5 years my ex got together with a guy who was on benefits and he moved in to the house. Next thing I got a letter from the CSA asking for a statement of my earnings. I explained that my ex had settled amicably and that I was paying 100% of everything for my kids. Their answer was that any money they deem I should pay would not be going to my ex but to the CSA. I told them to do one. A while later I got a detachment of earnings applied which was totally ridiculous! In the end I had to leave my very well paid career as they were strangling me financially. That’s why I ended up starting my own business so I could ignore their requests and tbh it turned out ok but believe me once those that’s get their teeth into you your in trouble

meldrew66

eaststandmike said:

meldrew66 said:

valleynick66 said:

I would imagine they have access to his ‘tax’ details and in which case they will know (or can learn) his true income. 

…..as neither the drawings nor dividends are published in his micro accounts (it’s a balance sheet only because theirs is a small business) not sure how they even know about the £12k which they’ve quoted in the letter. If you’re right, that does suggest dividends are NOT included in their income calculation?

If he is taking a dividend that means he is a shareholder and possibly a director. This information is easy to find out. He is drawing 12k per annum so he pays very little tax on this amount via PAYE. He will need to pay tax on the dividend drawings which is a higher rate so once again this will be in the system somewhere.

He can take a chance and keep his head down but if they dig deeper and find out they could go after him for back payments 

That makes sense. Yes, he is the main employee and also joint company director. The current arrangement for £160pm was made between them when they separated years go so I guess there is no question of any ‘back pay’ being relevant as his income has never been used to set that amount but, of course, the clock will be starting now with CMS now involved.

orpingtonRED

I'm no expert but if he's earning over 60grand he's under paying in my opinion and she will be in her legal right to ask for more.
You said that it's been an informal agreement but I hope he has done bank transfers and not cash. He may have to prove previous payments.
I've been through it and and will not judge anybody but 300 per month per child I was told at the time...this was a few years ago.

meldrew66

AndyG said:

They have always been a nightmare!! I got divorced 20 years ago and it was very amicable. My ex kept the house and I paid 100% of everything for our 2 kids and they stayed with me every weekend. After 5 years my ex got together with a guy who was on benefits and he moved in to the house. Next thing I got a letter from the CSA asking for a statement of my earnings. I explained that my ex had settled amicably and that I was paying 100% of everything for my kids. Their answer was that any money they deem I should pay would not be going to my ex but to the CSA. I told them to do one. A while later I got a detachment of earnings applied which was totally ridiculous! In the end I had to leave my very well paid career as they were strangling me financially. That’s why I ended up starting my own business so I could ignore their requests and tbh it turned out ok but believe me once those that’s get their teeth into you your in trouble

…thanks for sharing your experience. Sorry to hear it affected you so significantly. Doesn’t seem at all fair that you were treated that way in the circumstances. 

meldrew66

orpingtonRED said:

I'm no expert but if he's earning over 60grand he's under paying in my opinion and she will be in her legal right to ask for more.
You said that it's been an informal agreement but I hope he has done bank transfers and not cash. He may have to prove previous payments.
I've been through it and and will not judge anybody but 300 per month per child I was told at the time...this was a few years ago.

Thanks Red. Yes, he sends the money to her by bank transfer each month. I don’t think there is any dispute about him making past payments but she is mad as a box of frogs so who knows what she will allege if she feels things aren’t going her way.

charltonbob

Charlton and on said:

He paid £160 a month and now has to pay £120?

Either way, it costs more than that to raise a kid.

£160 a month ? I was paying double that 25 years ago (on a small wage) they totally fucked me. Wouldn't take any other obligations into account, I had a fair sized credit card bill & they told me I shouldn't have had a credit card !!! My ex had her own cleaning firm but CS told me that I had to prove it. Absolute bastards, plenty of other things I could say, you can see why there were so many suicides at the time.

charltonbob

orpingtonRED said:

I'm no expert but if he's earning over 60grand he's under paying in my opinion and she will be in her legal right to ask for more.
You said that it's been an informal agreement but I hope he has done bank transfers and not cash. He may have to prove previous payments.
I've been through it and and will not judge anybody but 300 per month per child I was told at the time...this was a few years ago.

Definitely this, I used to pay the bitch (& before anybody calls me out for language, this is exactly what she was/is, a lying bitch!) in cash as she claimed that she didn't have a bank account so I got her to sign a receipt every month. Quite a few years down the line I started getting letters from CS about £3k arrears which she claimed I had never paid her, if I had missed one payment (I never did) she would have been straight onto them complaining. Now they were saying I had to provide proof that I had made the payments & by then the receipts had been binned. I never imagined that years down the line she would be able to make these claims. Of course in the first place when she said that she had no bank account I should have gone back to the CS agency & arranged to pay them direct & considering the amount of shit that I've collected over 70 years, keeping those receipts should have been easy. Hey ho you live & learn. Anybody in the same situation these days, don't believe a word you're told & avoid cash payments like the plague. I'm sure that nobody can be as stupid as I was but just a warning. 

Mortimerwasgod

My arrangement is also informal with my ex and I pay for 4 kids, around 900 a month and I'm on 75k pa. It does reduce with each child but I use the gov.uk site which calculates for me and always send over updates to my ex when my salary goes up etc. That avoids CSA and their extortionate fees on top. I'm lucky so far in that she is still single,  from other mates it does seem that once a new bloke appears it can get messy. Good luck, as you say he does sound like he contributes well overall, maybe the website can help.

golfaddick

So many put upon fathers my heart bleeds......

Dividends are not usually part of a standard CMS assessment but the recipient party can ask CMS to readjust the income to allow for it.

Based on an income of £60k and having his son stay between 1 & 2 times a week.....and also taking into account the paying parent has 2 other children then the CMS calculator suggests a monthly payment of £420. 

Stu_of_Kunming

Should have got divorced in England.

I pay 30% of my salary, which works out at about 2x her salary. 

CAFC_CAT

Stu_of_Kunming said:

Should have got divorced in England.

I pay 30% of my salary, which works out at about 2x her salary. 

Seems you're screwed over because usually what I hear/read is that the other side complaining how insufficient the payment is.

charltonbob

Mortimerwasgod said:

My arrangement is also informal with my ex and I pay for 4 kids, around 900 a month and I'm on 75k pa. It does reduce with each child but I use the gov.uk site which calculates for me and always send over updates to my ex when my salary goes up etc. That avoids CSA and their extortionate fees on top. I'm lucky so far in that she is still single,  from other mates it does seem that once a new bloke appears it can get messy. Good luck, as you say he does sound like he contributes well overall, maybe the website can help.

When I stopped paying for my eldest they just upped the payment for my son as I now had more disposable income. Even after he left school I had to keep paying for a period of time, it may have been until he was 18 & then had to pay until the end of the school term. Can't be 100% sure of the details. my memory fades more every day 

_uptheaddicks

The figure of £160 seems way too low, let alone £120. Their agreement is an informal and personal one. Did they ever write a contract of the agreement (even in an email)?

She needs to focus her efforts in getting the CMS to perform a full assessment and let it be known that his income arrives in the form of multiple sources (salary and dividends and who knows what else).

ShootersHillGuru

Some fathers don’t pay anything.

AndyG

ShootersHillGuru said:

Some fathers don’t pay anything.

Very true but they shouldn’t take from those that do in order to subsidise those that don’t 

_uptheaddicks

Ah, @meldrew66, you forgot to mention the age of the child and if they're currently in full-time education?

meldrew66

_uptheaddicks said:

Ah, @meldrew66, you forgot to mention the age of the child and if they're currently in full-time education?

…the lad is 11 years old

meldrew66

Update: thanks for all the helpful comments, reference points and feedback. I summarise our current knowledge and thinking as follows based on the information known since my original post:

1. The CMS initially base father’s income on salary and do not include company dividends at that point. This means that the £120pm payment they have written to him about is actually correct.
2. If the mother wishes to challenge CMS in not including the dividend in their income calculation, it seems that CMS might then add that in and recalculate the child support payment figure upwards.
3. Golfie has used a calculator that suggests the higher figure would be £420pm.
4. We all agree that £120/£160pm is a low payment sum and should be higher. Others on here pay about £250-£300pm per child.
5. I’m advising my son-in-law to offer the mother £300pm and for that to be formally agreed in writing. He then needs to respond to CMS that he is paying her 250% of what they say he should be paying.

Seems fair to me to all parties concerned. Given how awful a person she is, I am expecting her to refuse the £300pm and pull everyone into a costly world of pain and hassle. I’ll keep you posted as I’m sure my situation will be relevant to others on here in the future and may prove to be helpful for our CL community. X

golfaddick

ShootersHillGuru said:

Some fathers don’t pay anything.

Some ex-wives don't either.

When I divorced 14 years ago I started paying my ex £600pm for my 3 kids. Informal arrangement and I saw my kids most weeks, having them to stay every other weekend. 

Then 6.5 years ago the kids (then 15, 14 & 12) fell out with their mum & came to live with me. Around this time she stopped working due to injuring her knee at work. She has not worked since & not paid me a penny either. I could have gone to CMS and got £7per week as she was on benefits but couldnt be arsed. I mean, who wouldn't want to help someone bring up their children. 

bobmunro

Reading this thread hits home to me how fortunate I am to have only had one wife, and mother of our children. 

Chippycafc

Used to be 20%for the 1st child and  5% per child thereafter. No idea what it is now. 

Chippycafc

I have been through the process and it's ugly. All the man is thought of is a walking pound note.  No thought of how they will live or where they will live.

My ex got 73% of our assets and a generous monthly sum for the kids. And she wasn't happy with that.

But i am a lot better off in heart and mind.

No wonder father's for justice was founded. 

usetobunkin

bobmunro said:

Reading this thread hits home to me how fortunate I am to have only had one wife, and mother of our children. 

Absolutely agree, met my wife 51 years ago. 

(Never a cross word!)
Somebody asked Alan Sugar what was the best decision he made, he replied marrying the right person.