Hello all,
I hope someone can help.
My Ex Partner put in an application to CMS in January 2022. I received a letter saying that this would be based from earning from 2019-2020. That year I earnt £47K, from an old employer. I believe they did not have figures (P60) from HMRC as I had to submit a tax return in 2020-2021 due to the High Income Child benefit charge? I called CMS and confirmed that my salary was higher. I however went part-time in Feburary and I believe this would put me on similar salary of around £47K. The lady at CMS was actually very helpful and said she would do a calculation off my last two pay slips to see if I was over tolerance. This came in at around £59K for a yearly amount which off my last two pay slips was just under the 25% threshold. So the official figure used was £47K from 2020 tax Year. However, on checking my tax return I can see that my salary was £62K in 2020-21, over the 25% rule from the previous year. I can see from my earnings this latest tax year 2021-2022 that i earnt around £58K, just under the 25% rule from the historic value used.
A. Does this mean at my annual review in January I will owe arrears for a full year as it will be based off 2020-2021 figures, which is over 25%? I say this as I will have to do a self assessment again for the previous year, which i believe is delaying the figures available from HMRC?
B. If this is the case Does anyone know if i can try to get this adjusted now rather than being hit next year? I don't want to owe arrears as well as potentially be classed as earning 25% more that what my new salary is.
Due to the nature of my job I can work a lot of overtime which is very inconsistent, but some months i can earn over 25% of my new part-time salary. Some months its basic salary. I don't mind paying my ex what is fair but I don't want to be and can't afford to paying 25% additional each month if i'm not earning it.
C. If i pay into a private pension when are the figures deducted from CMS calculations?
D. Do private pensions contributions reduce the gross weekly salary if they are under the 25% ruling?
Many thanks.
Hi. With private pension payments, you would have to contact CMS and send evidence of it. It should reduce your gross income and you pay less in maintenance.
If your current income today is 25% less than what they have calculated, then you can contact and they will reduce payments. You would follow same process when they do next annual review. The pitfalls of overtime and bonuses will mean you pay more maintenance in future. They also say you should inform them within 7 days if your income drops or increases by 25%
@dadsdoitbest Based on the information you have shared, consider contributing to a SIPP (Self-Invested Personal Pension) via the Salary Sacrifice - you can choose where your pension is invested. Not only will it be a great tax saving incentive but also benefit your retirement planning and planning ahead for your children. You can invest £40,000 each year and greatly reduce your tax liability for each year of contribution. The CMS can NOT take the 40K pension contribution into account when calculating your maintenance payment.