Hi all,
I realise the topic of bonus' has been asked before but my question is obviously personal to my situation.
I am due to receive both a 22% salary increase and a £2500 taxable bonus at the end of July which will be more than 25% for that month.
Imagine if CMS do a random income check in July and see my income has increased more than 25%, will they recalculate straight away or will they see that part of it is a bonus and it is obviously only for that month?
Is the 25% a threshold for the whole year? Or is it applied month by month?
If I increase my salary sacrifice pension contribution to 50% for July, then back to normal for August again, will they see that I still had an over 25% increase in July or is it hidden through the pension? I don't know what they can see from what my employer declares to HMRC.
Is there anything that triggers a random income check? Do they have a system that auto checks peoples monthly/weekly incomes and if it's over 25% it forces a calculation?
Thanks
hi. if at any point of the year your income increases or drops by 25% you should report to CMS.
info on their periodic income checks
https://www.voiceofthechild.org.uk/wp-content/uploads/2017/10/Income-Current-Periodic-Check.pdf
The periodic income check usually kicks in when you’re on a “current income” status. I ended up on that because I declared a 25% increase, so 11 months after you declare that, they carry out a periodic income check. It was a bit of a nightmare for me but that’s another story.
If you’re on the standard annual review and HMRC system, I’m not aware they do periodic income checks as they have no reason to not believe the HMRC system?
As Bill337 mentions, you do need to declare any increase or decrease of 25% or more though. It’s up to you if you want to be strategic in keeping it at 24% however 🤣