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TOPIC: Variation in earnings

Variation in earnings 1 week 2 days ago #100548

  • Dave11
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Hi all hope you can help!
Currently divorced father of 2, pay my ex wife circa £700 per month via CMS calculations, I pay this direct to her without fail every month and a whole we are reasonably amicable.
However I will soon go from being on PAYE salary of £70K per year and a 10% shareholder and Director to 100% shareholder and Director paying myself a basic PAYE salary of £12k per year with a yearly dividend if I turn the business profitable once again.
How will the CMS calculate this to start with and how do I prove my drop in income from £70k to £12k before a dividend is hopefully paid at year end, I am aware a dividend is classed as earnings but that wouldn't be in the immediate future.
Hope this makes sense, any help greatly appreciated.
Dave

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Variation in earnings 1 week 2 days ago #100552

hi,

you will have to phone/write to CMS and tell them your now a director of limited company etc and give info about it.

do you have an accountant? what you do is after your annual accounts are sorted out by your accountant, you ask them what your income was for the tax year, and they should tell you your salary and dividends amount. if possible try get them to send you info in letter format. for me email was good enough. and you send this info to CMS. with me i was just paying myself salary in dividends. thats it. CMS did variation on dividend amount and told me what i have to pay.

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Last Edit: by Bill337.

Variation in earnings 1 week 2 days ago #100555

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Thanks for the reply. Yes have an accountant it's just more the transition from high salary to low salary and if CMS make an immediate adjustment to reflect this before the year end etc? Were you in the same position?

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Variation in earnings 1 week 1 day ago #100557

Be careful. Your reduction to £12K salary will result in a very small CMS payment to your ex of Circa £85 per month. This will mightily annoy your her, it did mine, even though I was trying to get my dividends added at the same time but was a different CMS department and they did not catch up till later.

The result was my ex threw the kitchen sink at me and took me to tribunal for hidden income, they look into your accounts etc, etc.

Plus, if you declare 12K and then at the end of the year when you pay yourself a dividend and it is over 25% of your basic(which I assume it will be), you will be back assessed for the previous year and have the underpayment added to the following year. It took my maintenance payments from £567 per month to £1077 in clawing back the underpayment.

So as said, be very careful in your decisions.

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Variation in earnings 1 week 1 day ago #100558

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Hi, thanks for the reply, just the info I was looking for as I'm always assessed a year in arrears now anyhow as how my assessment date falls in March just before the tax year so probably best to be honest up front and try and come to an amicable arrangement before it bites me in the arse as it has you!! She will definitely throw her toys out the pram and make life very difficult!!
Thanks

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Variation in earnings 1 week 22 hours ago #100573

Dave11 wrote: Thanks for the reply. Yes have an accountant it's just more the transition from high salary to low salary and if CMS make an immediate adjustment to reflect this before the year end etc? Were you in the same position?


hi, no i have been self-employed for around 5 years now, and the stupidness kicked off last october.

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Variation in earnings 1 week 22 hours ago #100574

HRabbit wrote: Be careful. Your reduction to £12K salary will result in a very small CMS payment to your ex of Circa £85 per month. This will mightily annoy your her, it did mine, even though I was trying to get my dividends added at the same time but was a different CMS department and they did not catch up till later.

The result was my ex threw the kitchen sink at me and took me to tribunal for hidden income, they look into your accounts etc, etc.

Plus, if you declare 12K and then at the end of the year when you pay yourself a dividend and it is over 25% of your basic(which I assume it will be), you will be back assessed for the previous year and have the underpayment added to the following year. It took my maintenance payments from £567 per month to £1077 in clawing back the underpayment.

So as said, be very careful in your decisions.


good advice thanks. what CMS should have done is class your salary and dividends both as income right? they class dividend as un-earned income but still take into account. as in my current position, salary= 0 and i only have a dividend figure, which i told CMS and they classed as my income.

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Variation in earnings 1 week 10 hours ago #100577

They initially took my salary @12.5K and despite me telling them the monthly dividends I was paying myself, they said the dividends had to be calculated by a different department. It took them 5 months and after much chasing to catch up. So ex was getting £85 for 5 months and then they caught up. In the meantime, even though I was being honest and trying to rectify the situation, she applies for a variation on undeclared income etc and I get a letter to attend a tribunal........

The bit that got to me was that it was me sending letters, volunteering to pay more, trying to resolve the situation, while my ex just complained(about me) and the CMS treated me as a criminal trying to avoid paying my ex.....very frustrating when all i wanted was the correct amount to be calculated!

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Variation in earnings 6 days 21 hours ago #100584

they are a pain. i didnt get in trouble with them. but it took them 2 months to track my ex, then to work out the variation on dividend income. so now i have to pay, including 2 months back-dated payments. i recently had my payments recalculated. this time they did it quick because i was ringing them up regularly.

they are just over-stretched. and theres still so many cases where one parent is getting away with paying a ridiculous amount like £1 a week, £7 a week lool.

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Last Edit: by Bill337.
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