One question I have is in relation to the 25% rule.
If one is sick for 2 weeks and income has dropped by more than 25% during that period can one request a variation for that period? Also situations such as parental leave or unpaid leave same question where it drops income by more than 25%
Also if one is due to start new job say 15% less salary, as this doesn't trigger a review and therefore a drop in payments is it better to not go straight from one job to another but instead agree a start date in 1 months time and in the meantime become unemployed so income drops more than 25% so payments are stopped and then restarted after a month but on the new 15% reduced wage?
Would the above cover the flaws with the cms system and whilst for a short period result in a drop in income over the course of a year result in a more equitable payment arrangement with the person receiving maintenance?
PS I am by no means looking to avoid paying cms or not paying the amount I am due to pay, just that the 25% rule means that a drop in salary by 20% would not lead to a reduction in payments and therefore the amount paid would be higher than otherwise should be paid. The 25% rule is there specifically to reduce administration costs for the DWP and not for any other reason.
So the income has to drop by 25% over a 2 month period, you will require to submit 2 payslips for a mandatory reconsideration. To work this out they will do the following calculation:
Add both months gross salaries together.
Multiply this total by 6 ( this will then give you annual total salary)
Divide this by 52 to give a weekly total.
It is this weekly total that they will use, so it must have gone down over 25% from the previous annual review figure.
In terms of the new job, you should tell them of when you leave you old job, at this point they will put you on a £0 maintenance following you sending in your P45, then when you tell them about your last job, they will use the current annual review figure, unless your new salary has dropped by 25% or more. So starting a month later will make no difference.
The other thing you can do is put money in your pension to bring your drop over 25%. Depending on your age they are likely to see a 10% - 12% pension as reasonable.
So that I understand you, if moving from a job to another with a 15% drop in salary then until the annual review the payments remain the same based on the previous job with higher salary unless unemployed for 2 months or I increase pension payments to bring overall drop to 25%?
Re sickness, if I'm off sick for a month and therefore salary is reduced by say 80% (due to SSP) this is not taken into consideration and the amount to be paid remains the same as based on full salary?
Wow, I'm shocked as to how it works.. I can see why many people who pay CMS feel they are failed by the system.
Imagine being unemployed or off sick for a month and then once full time again having to pay 2 months CMS (to Inc arrears when off sick or out of work)..
I guess an informal arrangement using the CMS calculator possibly based on previous months gross income is best way if both parties are amicable and can agree.. That way reductions but also increases of any amount can be factored in not just 25% over 2 months..
So I'm intending to eventually on the 1st of each month run calculator and pay ex that.. If I'm sick or out of work then payments drop, if I do overtime or get a pay rise then payments go up..
If ex agrees would that be best way?
I know most ppl who receive know to go via CMS but that isn't always best so I'm hoping to try this method..
Yes now you can see! It makes it easier if you are aware of the rules, and can predict what is coming, but even now I get surprised by some things.
Just to be clear, if you are ever unemployed you will go to a £0 assessment, but it is imperative that you tell them as soon as these things happen, as they will not backdate things.
My advice would be to try to have a family based arrangement between yourselves, it will be so so much easier.
BUT.... If there is any point where your ex threatens to open a case, then do it first yourself and pay the £20! That gives you a bit of control back, like when to close the case when the child finishes education.
Thanks Yoda, so if I open case first, can the ex also open a case or do they check for my details and then not allow her to open a case.. What are the benefits to me doing it first?
Also another question if you don't mind...
Pensions - how does this work for CMS? If for example I earn £20k and contribute 10%, will that just drop my gross salary to £18k and calculate CMS based on that?
Also is there a guide to how much the CMS will allow for pension payments? Would they factor in that I've been unemployed for some time now and therefore would need higher than usual payments to catch up?
What would reasonable amounts be for age 40/45/50/55?
Also would I be right in assuming that until I am divorced to not make any pension payments and just 'spend' the money as until I am divorced any payments that I pay into a pension can be included in the financial settlement as part of divorce?
Therefore if ex drags out divorce process then I can pay even higher amounts into pension after divorce to catch up?
I poss could get a financial advisor to sign off on amount required to be paid to cover retirement etc...
No your Ex cant open a case as well. It is one per child. The benefits of you doing it mainly is that you have control over when to close it. When your child reaches 16 or 18 and leaves education you can close the case. If you ex wants to open a case, they would then need to prove the child is in full time education. If your ex opened a case, and did not inform them that the child was no longer in education, they would just take her word for it, and you would have to prove that they had left school / college. Pretty screwed up I know. One of my big regrets is that I did not open a case when I had a window of opportunity to do so, she got their first!
The CMS look at your HMRC P60 figure. This already has pension contributions take off. When looking at pay slips they will also deduct pension contributions. So yes your assumption is correct.
There is no guide as such, there was an article on voice of the child which no longer exists unfortunately. It basically said that 12% was reasonable. There was also a table that showed the governments guidelines per age, again I cannot find this, a quick Google should bring up some answers. The big thing though is that this is very subjective, what is reasonable to one person may not be reasonable to another. The CMS are unpredictable, so dont try to second guess them. They wouldn't factor in the fact you were unemployed for a period. But on your P60, the figure they get is minus pension, and they don't see what this is, They only see pension deductions if they see payslips.
With the divorce and pensions, I am not clued up on this I am afraid.