Hi,
If you have permanent PAYE job then they expect you to report change if income increases or drops by 25% or more. If you don't report thr increase then they like to backdate from the date this change happened, and you end up paying much more because of arrears.
This is where I get confused. If I don't report it, it'll eventually get picked up in my annual review so I can't avoid them finding out & I'm not trying to divert or hide income.
My question is more of a thing around the annual review. My understanding is at the annual review they just do an automatic check on HMRC last full tax year and use that. Regardless of if its high or lower, they just use that figure and job done. Therefore no arrears.
My plan is to save xx% of my gross overtime wage for the next annual review so when it is picked up then I'll have the money saved away if that makes sense.
I'm not convinced they'll backdate anything unless it's done inside the annual review dates?
Hope this makes sense & someone can clarify.
@fightingback1991 Whilst it could be as you said, i have also experienced in the last 2 years them seeming to pick up on an increased salary payment and acting upon it. I am not sure if this was my ex requesting or if they just did a periodic check as they say they can do.
I believe if they pick up on increased earnings during the year, it will be backdated to when the increase(above 25%) happened.
I am not sure what happens if you dont declare and they just do annual review. Perhaps they do only adjust for the new year, or maybe they backdate. No one can be certain with CMS!
I think, in theory, there is a fine if you fail to disclose, so you are best doing so, and these days, PAYE is reported to HMRC monthly, so it's entirely possible that CMS are being fed this automatically (would make sense really).
If you have been avoiding overtime, that implies that you don't need the money now, in which case, you could look at doing overtime and putting that extra income into a pension, that way it's legitimately excluded from the maintenance calculation.