Hi Everyone, Im hoping that someone will be able to advise what I should do about maintenance payments to my ex wife. I have two children and have them over 104 days per year, I own a limited company and take home £2500 per month. I pay £400 per month in Child Maintenance to my ex and I also pay £200 per month into a trust for my children to give them a lump sum when they are older. I told my ex wife this when we were splitting up, and she was fine with that, I also said that if I ever took any lump sums out of the company, which I sometimes do, then I would pay 20% of that into their trusts, again she was happy with that arrangement.
Now she has messaged me to say she wants more money, another £50 per month which Im not happy about. She has no mortgage and is spending money like its going out of fashion, going on Cruises and buying nice cars etc etc.
So what I want to know, is if I'm paying myself £2500 per month, what should I be paying in child maintenance? Ive used the calculator on the gov website, but thats going to work it out for someone on PAYE.
hi,
child maintenance rate for 2 kids is 16% of your gross weekly income. so that would work out at about £400 a month for you. but can also depend on how your money is set up in the company and what expenses you have. do you have an accountant? typically they would assign a salary of around £7-8000 per year, and the rest is whatever money you take out the company as dividends.
If you don't have an accountant, I suggest you get in touch with one. then you can decide which option is better for you, keep to a private arrangement, or going through CMS. If your to go through CMS, then they will only see the salary amount in your HMRC records and calculate maintenance based on that. you can declare dividends and they will take it into account. or if you don't declare, your ex could ask CMS to take your dividends into account if she is aware of them.
Assuming the figure is no higher than you are already paying, then I would suggest that you open a case with CMS yourself, as that gives you more control. The 16% quoted above is on gross, not net, so it depends on what you mean when you say you are taking £2500 per month. I would certainly agree that you should speak to an accountant.
If you do take large lump sums out, if you don't need the money, then I would suggest that you put it into a pension for many reasons. And when you are 55, you could start to draw some out tax free, but definitely speak to an accountant about the pros and cons of this.