CMS and Capital Gain

Jeff.Jones78 · 11 November 2015 at 8:06PM

Hello,

I just had a chat with my ex and she informed me that she open a case with the CMS for me to pay maintenance. I have been paying it; however, she says that without the CMS letter that my payments are not counted towards her income and do not help help to have a new mortgage. (is that true?)

As I understand the CMS will have access to my yearly gross income from the HRMC and then deduct the pension payments. (Do they also deduct the monthly maintenance payments?)

Anyway, since I dabble into shares, I do wonder one thing. Let's say I make some money with my shares and this above is above my CGT allowance. Let's say I make a 50k profit in a given year. Would the 50k be added to my gross annual salary for the maintenance calculation? Or would Capital Gains be excluded from the maintenance calculation?

Thanks in advance.
J

WYSPECIAL · 12 November 2015 at 10:07AM

It's not earned income so wont be included in your assessment.

You don't get tax relief on your CM payments.

Unlikely that a lender will accept a letter from the CMS when considering income for a mortgage as it is not guaranteed. You could give up work tomorrow, lose your job etc and the payments would go down or stop altogether. I think some lenders will take CM into account if paid via court order.

Jeff.Jones78 · 12 November 2015 at 10:13AM

Thanks a lot for the prompt answer!

WYSPECIAL wrote: »

It's not earned income so wont be included in your assessment.

Are you 100% sure of this?
I cannot find any link on either the CMS nor the HMRC website. The only relevant link I can find is talking of obtaining the yearly income from the HMRC ( https://www.gov.uk/how-child-maintenance-is-worked-out/how-the-child-maintenance-service-works-out-child-maintenance ) but there is no mention of Capital Gain/additional taxable revenue?

J

shoe*diva79 · 12 November 2015 at 6:11PM

Its not used in the assessment as earned income but there will be a threshold that capital over a certain amount (it was £65k) can be used. I am not sure how this works with the CMS so would be worth you speaking with them to clarify. The system is so new, there is little information around about the more complex cases.

WYSPECIAL · 14 November 2015 at 6:57PM

shoe*diva79 wrote: »

Its not used in the assessment as earned income but there will be a threshold that capital over a certain amount (it was £65k) can be used. I am not sure how this works with the CMS so would be worth you speaking with them to clarify. The system is so new, there is little information around about the more complex cases.

The capital can't be used but the income it produces can be IF a variation is applied for. Under CSA it was assets over £65k, not including your home, but under CMS it is income over £2500 that can be included. Again, if a variation is applied for.

So for the OP if his portfolio produces dividends of more than £2500pa it is possible that his ex could apply for a variation and have that income included in the assessment. However the gains made by selling an asset, which was the original question, wont be included.

WYSPECIAL · 14 November 2015 at 7:01PM

Page 18 of this leaflet if you want a link

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/327987/about-the-child-maintenance-service.pdf

CMS and Capital Gain

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