CMEC calculation - new system

surreybased

Anyone understand how the proposed charging is due to work? From a quick calculation it feels as if the gross vs net basis will represent an increase for most NRPs.

Assuming: (not taking into account extra nights or additional children)
Salary £45kpa - net month £2700 x 15% = £405 - Old system
Salary £45kpa - gross 45000 x 12%/12 = £450 - Proposed system

NASCA info: The new rates applied against Gross income will be :

12% for one child

16% for two children

19% for three or more children

I know the system isn't finalised yet but these numbers are what seems to be around and I'm hoping it isn't the case as I can't imagine how NRPs could cope with a sudden increase.

PreludeForTimeFeelers

surreybased wrote: »

Anyone understand how the proposed charging is due to work? From a quick calculation it feels as if the gross vs net basis will represent an increase for most NRPs.

Assuming: (not taking into account extra nights or additional children)
Salary £45kpa - net month £2700 x 15% = £405 - Old system
Salary £45kpa - gross 45000 x 12%/12 = £450 - Proposed system

NASCA info: The new rates applied against Gross income will be :

12% for one child

16% for two children

19% for three or more children

I know the system isn't finalised yet but these numbers are what seems to be around and I'm hoping it isn't the case as I can't imagine how NRPs could cope with a sudden increase.

I think that the people who will be affected most will be higher earners, but I think that there is some sort of allowance being built in for people on higher tax brackets.

For example, if you do the same calculation based on someone earning £25,000 then the monthly increase from current scheme to future scheme will only be £10 more, if the wage is only £15,000 then the difference is £3 per month more under the future scheme.

Rustic100

I also think it will hit higher tax payers, as a gross payment will mean that CSA effectively gets the parents basic tax free allowance (around £5k) and the parent then pays tax on all of his/her remaining income.

clevertrev

I worked out mine will be approx £40pm more under the new system.
I think the powers that be are underestimating the effect this will have on NRP. With families already hit hard in very difficult times it could tip some people over the edge.
Also, how many times do we hear on the news, that the HMRC have made a mistake with tax codes and people have to repay money.Won't it be great when they have a hand in the new calculation! I don't think so.
Disaster is just arounfd the corner for many !

Rebecca01

Apparently over 800 pounds a week earnt then there will be a reduction.

So 45KPA is approximately 865 pounds a week gross. So on the 800 NRP would pay 12 percent of that which is 96 pounds. On the remaining 65 they would pay 9 percent of this. So 5.85. So a week it would be approx 101.85. A month that equal about 441.00.

Still more for the NRP.

We knew it would never reduce. Sigh!!!

mrsspendalot

I think you can allow pension contributions before you calculate the gross income amount though - as long as you are not putting away significant sums of money into pensions with the purpose of reducing income solely for avoidance of CM.

clevertrev

I don't agree,its based on GROSS so people can't hide anything.If you can start taking pensions into account,then people will bulk up pension contributions.Many have, thats why the gross system is coming in!!!!!!!!!!!!!!

mrsspendalot

clevertrev wrote: »

I don't agree,its based on GROSS so people can't hide anything.If you can start taking pensions into account,then people will bulk up pension contributions.Many have, thats why the gross system is coming in!!!!!!!!!!!!!!

CMEC will calculate maintenance based on Gross Income and not Net Income. Calculations will be based on the latest information held by HMRC thereby removing the need to rely upon NRPs to supply verification of income by pay slips etc.

The calculation of maintenance will not take into consideration any expenditure of the NRP such as mortgage, gas, electric etc. Pension contributions have been confirmed as an allowable expense and thus will be taken into account, although there are measures now in place to prevent the NRP from diverting large amounts of income into a pension fund in a bid to reduce maintenance payments.
http://www.nacsa.co.uk/index.php?option=com_content&view=article&id=84&Itemid=110

clevertrev

My apologises,its the first i've seen of this.Have you seen anything offical from the DWP ?

mrsspendalot

clevertrev wrote: »

My apologises,its the first i've seen of this.Have you seen anything offical from the DWP ?

No, but I'm browsing! I am both an NRPP and a PWC so my interest in the changes is from both sides.

clevertrev

Ok no problem. If I find anything i'll post it.