@Daddyup That link is very informative, thanks.
From what is stated therein, it seems that my ISAs should not be included in a notional income calculation as long as I can convince the CMS that they are for repayment of my mortgage. Eg. 1 it is stated that the net value, i.e. after any mortgages are deducted, is what should be assessed, and Eg. 2 it also states that anything that generates unearned income should not also be assessed from a notional income perspective.
So convincing the CMS of the link seems to be important here.
There is also the requirement for any notional income assessment to be ‘just and equitable’ though seems to leave this judgement to the discretion of person(s) processing the variation request.
The Just and Equitable caveat does not seem to have any clear guidelines. However, the legislation states that if an asset had to be sold to pay additional child maintenance then it will not be considered as an asset that has a notional income.
Do you have something in writing with the lenders of the mortgage regards a repayment mechanism that referenced the ISAs? Might help with the CMS?
Do you have something in writing with the lenders of the mortgage regards a repayment mechanism that referenced the ISAs? Might help with the CMS?
No I don’t, I recall a general statement along the lines that I had an appropriate repayment vehicle in place. In the absence of this I have tried to get confirmation of when I made my first investment in to the ISA wrapper - hoping to show that this was shortly after I obtained my mortgage. Ok not proof but the best I can do I think. However my ISAs were originally on a different platform to where they are now and the transaction history was not migrated over, and I am having difficulty tracing the original ISA platform company (nor have I kept paper statements from that long ago).
So I think I’ll have to rely on the CMS simply believing me, and since I have provided 100% full financial disclosure of absolutely all my assets, all with statements etc. including all current accounts, premium bonds, sharesave schemes, absolutely everything, even things that my ex- nor the CMS would have known about, I am hoping that I have demonstrated my integrity and honesty to them. Here’s hoping anyway ..
I have just gone through similar with CMS and provided all the information, the ex was successful in getting the variation through.
I have just had the letter from CMS today stating that they have decided to vary the order based on a notional income on my savings. I have a lump sum in my bank account after we sold the FMH in January and have not found a property to purchase as yet.
The CMS have had the bank statements showing that the interest I am currently getting is minimal and that I will be earning £300 a year in interest, but they have decided that they are going to add an additional £20,000 for 'additional income' to my current income. I would love to know which bank account they have the money in to be able to earn that interest rate!
I am happy to pay for my child, but now they are taking money from me that I am not even getting in the first place, it just seems wrong.
I pointed out to CMS in my letter that the money was from the sale of the FMH and I am currently looking for a property to purchase which I will then rent out and am happy to pay the money due on the rental income.
Would I get anywhere if I ask them to reconsider?
@stayposive If you look at the link that Daddyup provided earlier, it would seem to suggest that the CMS should incorporate the £300 interest in the calculation rather than do a notional income calculation. I.e. it suggests that where an asset is generating actual income, that income should be included in the assessment instead of the asset being subject to a notional income calculation.
https://classlegal.com/news/challenging-a-nil-assessment-by-the-child-maintenance-service-part-two
I agree it seems wrong that they can assess CM on income AND assets. There are provisions that if the asset has been purchased from income already assessed for CM then it is exempt from a notional income calculation, however it seems that if the asset was purchased from income received in a year before CM was in place then it is fair game for notional income. However this also seems unfair - it is effectively assessing you on income this year plus income from a previous year.
The notional income variation certainly is not watertight, and as someone else posted earlier on this thread I think it should primarily be targeted at people who are living off assets instead of income.
Hi
I think the issue here is that the matter is quite complex and appears discretionary too.
However, it's not as simple as saying just because the asset generates an income it should be excluded for notional income purposes. After all the CMS have no control over where and how you hold the asset. Eg if you have £100k in cash you could hold this in an account paying 0.01% interest when the highest paying account could be paying 6% (appreciate there isn't account paying this but I'm just using an example) Would this be reasonable? Or would it be depriving the receiving parent and ultimately the kids?
I think depending on the values concerned especially in your cases, seeking specialist legal advice may be the better option as the potential savings of over turning the CMS decision would out weigh any legal costs incurred.
@Will99 I am planning on asking for a mandatory reconsideration on this, think I need to find an accountant first to see if in their opinion that the savings are income generating based on the interest earned, otherwise surely if the investment was not returning 8% they could claim it is an asset and should be recieving 8%.
Have you received any advice outside of this forum to advise yourself?
Have you received any advice outside of this forum to advise yourself?
No. In fact the existence of the notional income variation was unknown to me until a few weeks ago when I learned that my ex was applying for such a variation. She works for the CMS so knows what can be applied for and had also during our separation gone through all my financial documents and emails (I found photos of the same on my iPad - her google photos was still on there).
Had I known about this variation (and the intent of my ex to apply for it) I would have restructured my finances to use the ISAs to pay down my mortgage, so that I didn’t even have this money as an asset. However I am relying on the discretion of the CMS case worker to believe my arguments.
To StayPositive
Definitely ask for mandatory reconsideration. Even if does not change anything it keeps the door open for an appeal.
if CMS have assessed a notional income of £20K then they have decided your savings are £250K. Even that amount in a long term fixed deposit bond would not produce 8%. However, the powers above have set the rate at 8% which was the same as CSA under the 2003 scheme.
Reading the consultation papers on this subject suggests that the % was selected in the basis of prompting those with high value assets to pay more child maintenance as a penalty for trying to be a smart [censored] in the first place. For those who are worth millions or billions I can see the logic, but for mere mortals it seems harsh.
Some might consider £250K in the bank to be a lot. However, if it is all what someone has who needs to house themselves it is not a huge amount taking into account property prices, legal costs and that property will require furnishings.
Also, in your case the savings are from the split of matrimonial assets. Don’t know the details of your divorce (and don’t need to), but guessing that your share was based on reasonable needs to house yourself. That’s a bit different to someone who already has a home and at same time had £250K in the bank.
As soon as you have made an offer on a house inform the CMS that the capital no longer exists and that the child maintenance needs to be re assessed. Your primary home cannot be classed as an asset to which notional income can be applied.
@stayposi Agree with MysteryTrip - if you think you have a case against the initial decision then there is nothing to lose from a MR, and as MT says if that doesn't change anything you can then appeal to HM Courts and Tribunals Service.
As soon as you have made an offer on a house inform the CMS that the capital no longer exists and that the child maintenance needs to be re assessed.
Interesting - so if the asset no longer exists then this can be reflected 'real-time' so to speak in the CM calculation ? In my case then - if my ISAs are subject to a notional income calculation I can then decide to restructure my property finances (to use those funds to pay down my mortgage) and that would render the notional income calculation at zero (at least from that point going forwards) ?
Or - even better - if the six individual ISA funds that I have are treated as separate assets I could just move funds out of those ISA funds which breach the threshold. Sounds too simple a way to avoid the notional income assessment ....
Hi
Based on one of my previous links, I don't believe you will manage to convince to treat the ISAs separately it's more the underlying assets eg all shares will be added together and all cash added together... I'm also sure the link mentioned that you can purchase a property using the funds to reduce liability too (if buy to let then asset is generating income and if main home then it is excluded) and I assume that therefore you can pay down mortgage and achieve same result especially if its as a result of a consultation with a financial advisor whose professional advice is to do so...
Ultimately as the CMS can't control where u invest it and therefore you could put it into a low interest paying account, likewise they cannot control what you do with the funds especially if tied to professional advice (therefore can't be diversion of assets/income in my opinion)... However, as previously mentioned, before doing anything, considering the amounts involved maybe get some specialist advice.
I received a response from the CMS this morning with their decision about the notional income variation requested by my ex-.
Despite my arguments (stated previously in this thread) that the ISAs in question were solely to pay off the interest-only mortgage on my rented property and thus would not even exist had I chosen a repayment mortgage instead, and that this asset should be excluded on the grounds that I am already being assessed on the rental profits of the property to which the asset is inextricably linked, the CMS have in the end decided to include these assets in a notional income calculation.
However - they have based that calculation only on those individual ISA funds that by themselves breached the £31,250 threshold (which applied to two of the six ISA funds I have). Also they have based the calculation on the asset value as at the last annual review date (last November).
So I am really p*ssed off that they are included at all, but I guess it is not as bad as it could have been. Also it would seem that I am now able to restructure my finances to exclude these assets altogether from a future assessment :- either by changing my mortgage to a repayment mortgage and using my ISA money to pay that mortgage down, and/or by moving ISA money around between individual ISA funds such that no one fund breaches the £31,250 threshold.