The 50% Rule?

john10001

What is the 50% rule and how does it work?

FiatFan_2

When your iva is approved, you'll get a welcome pack which will have a paragraph stating home much income you can keep per month, anything greater than this 50% will go to your IP and 50% you keep.

For example, if your income was £1000 you could earn upto £1100 without declaring it. If one month you earned £1200 then £50 extra would be paid by BACS on top of your usual DD payment.

HTH

john10001

Thanks! So it seems like it is 10% extra of your pay you can keep without declaring then it is 50/50 of anything on top of that?

Is that gross pay before tax, net pay after tax, or disposible income after all outgoings?

And do you know the £50 extra that would be paid in this example, would that extra payment go to reducing the timeframe for paying the IVA? Or would it go into a black hole? E.g. you pay more than what you would have done?

FiatFan_2

yes, the 10% inbetween 1000-1100 is yours to keep without declaring anything.

that's in your bank pay, after tax etc straight from your employer. self employed, pass duno but doubt it'll be that much different.

that £50 would be in addition to the agree sum of the iva. it's there way of getting an additional amount onto of the agreed sum. In 4 months, we've paid extra twice.

UpToMyNeckInIt

Hi John,

Please double-check the wording in your IVA agreement, and if necessary clarify this point with your IP.

In relation to additional income, some IVA's operate the 10/50/50 rule as suggested by FiatFan, others are a straight 50/50.

Also some IP's just let you keep your payment as it is, only looking at it at review time, adjusting your payments for the following Year accordingly.

If in doubt, keep your case handler / IP updated.

FiatFan_2

I think john is researching pre-iva, that right?

I was unaware there were alternatives dependant on IP, our 10/50/50 works for us, our IP is very approachable if we have any doubts about the payment. The figures can be massaged a little by rounding up/down and whether you have reclaimed business expenses. Either way, our IP checks our over payment and confirms we've paid the right amount.

Sunshine2114

My IVA is 10/50/50 and paid a few times .. Apart from when we got £4 shares paid they took 50% ...

cheesedoffwithdebt

I believe it varies between IP's and so whatever has to be paid is in the original IVA agreement. However the best thing is just to declare and copy paperwork regarding any extra income you receive, that way you've covered your back and the IP is aware so they can verify the position. It puts the IP in a difficult position if you have extra income and they are not aware so in the interests of keeping a good relationship with the IP that's the best thing-I have had bonuses post IVA and have had to pay 50% of the net bonus after taking off 10% of the additional amount over and above my normal monthly salary.

nannymc

I have the 10/50/50 in my agreement, but please tell me does this apply to a second income if you manage to find an additional job during your IVA or just to your primary job

FiatFan_2

as i understood it, it's all income from employment including any separately paid bonuses, childcare payments etc that your employer might make, but expenses are subtracted from the total income figure for that month before splitting 50/50.

I dare say if the additional employment was 'cash in hand' then you could get away without declaring it, but if it's traceable through your bank or hmrc then would be better to declare it to your IP.