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Income for child support calculations

What income is taken into account in determining child support payable?

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I will say up front that I am ethically conflicted about this question. I have been presented with a situation where the person being asked to pay child support is claiming unfair treatment. If what they told me is true, then I think they have some justification for that, but I am only too aware I am hearing a single side of the story. As explaining more would require getting into more detail than I am comfortable doing (confidentiality considerations) I would prefer not to get into an ethics debate. However, I am happy to engage as much as I can with anyone that wishes to do so anyway. 

I was asked about what income is included in the child support calculation (the questioner looking at a new source of income and not being keen on paying more than they already do, which is not a pittance). Not dealing with child support on a regular basis, I did a little bit of research. Unsurprisingly, I was severely let down by the current dumbed down gov.uk pages, which are less than clear on the subject. I did find the child maintenance calculator (https://www.gov.uk/calculate-child-maintenance) and tried that. After a handful of initial questions I reached the part where you declare your income.  This says. 

[quote]This is your total income from employment or self-employment, before tax and National Insurance, but after pension contributions[/quote]

This would imply that someone wishing to avoid paying child support could simply run their business through a company and take all their income as dividends. (neither employment nor self-employment income). That doesn't sound right, so I am guessing this is just shoddy writing at gov.uk again. Anyone able to confirm the position and point me in the right direction for something I can show the querist to confirm?

Replies (8)

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By SXGuy
09th Sep 2021 16:12

It's likely they will treat omb director shareholders as self employed and as such will treat any money after net profit as the persons income before tax.

That's what I'm lead to believe. Whether I agree with it or not. Not my area unfortunately.

Thanks (1)
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By David Ex
09th Sep 2021 16:51

Any use?

Page 7 suggests taxable gross annual income

“By ‘income’, we mean earnings from employment, self-employment (profits from a business), occupational or personal pensions and certain benefits.”

So appears by “income”, they mean “some income”!! Unless the ‘business’ includes a company ….

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

EDIT: These Regs may still be in force - do they shed any light?

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

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boxfile
By spilly
09th Sep 2021 17:27

This might help. Currently if dividend, rental income etc is not assessed initially, the parent in receipt of CM has to ask for a variation.
The CMS can then reassess to include unearned income, and crucially also take into account deemed diversion of monies (eg. making excessive contributions to a pension fund).
The new proposals seek to automatically include unearned income from the off.

https://www.gov.uk/welfare/child-maintenance-reform

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Replying to spilly:
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By David Ex
09th Sep 2021 17:39

spilly wrote:

The new proposals seek to automatically include unearned income from the off.

https://www.gov.uk/welfare/child-maintenance-reform

You wonder which genius decided to omit in the first place. Presumably some absentee parent with a lot of unearned income.

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Replying to David Ex:
boxfile
By spilly
09th Sep 2021 23:32

I think the CMS went for PAYE income initially as it was pretty easy (and cheap) to prove & collect. It’s really only since they started charging a collection fee that they’ve tackled the more difficult income sources.
Might also have been down to Mumsnet and other support groups putting on the pressure!

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By bettybobbymeggie
09th Sep 2021 17:29

I have a client going through this. The CSA were not impressed by the Minimum salary and wanted to know about the Ltd company profits, not just dividends. I don't have any more than that I'm afraid.

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By zebaa
10th Sep 2021 00:50

This is a highly complex area. My advice is think carefully before you invest time (and therefore money) into it. In fact it is so complex I think the number of people who really understand it is very small. This small number often does not include the collectors, just to make things interesting.

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Stepurhan
By stepurhan
10th Sep 2021 08:55

Thanks for the responses all.

Some interesting links to follow there, and direct experience also appreciated. It sounds like an area that could take up an inordinate amount of time for a single client. I shall do some reading anyway, but I think it likely I will either pass up the client or redirect them to advisers that deal with this particular aspect regularly.

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