Whats the differences between CSA 2 vs the newer 'gross income scheme'

DAREDEVIL78

Hi , briefly i wondered if members could advise on the difference between csa 2 (post 2003) scheme and the newer so called '' gross income scheme'' ?

what are the differences regards calculating a sum for maintenance (ie rates/percentages etc) ?

also if a case was opened against me now would i be on csa2 or the newer gross income scheme ?

shoe*diva79

The newer scheme isnt finalised yet as far as i know. If a case opened now you would be on CSA2. Cases currently open will be staggered (eventually) onto CSA3 but dont hold your breath... I am still on CSA1 after being told I would be moved years ago!

DAREDEVIL78

only reason i ask is because i have a form recently sent to me from csa and at the part where it asks for my income details it asks for my gross annual earnings and not nett earnings . . . . after doing a bit of research i am sure this was one of the differences between csa 2 and gross income scheme where csa2 asks for nett and newer scheme asks for gross ?

PreludeForTimeFeelers

The maintenance enquiry forms have always asked for gross annual income.

The new 2012 scheme is currently being launched on a trial basis, so currently only new cases with 4 or more kids are on it, once it has successfully been up and running it'll be opened up to new cases where there are 2 or more kids, then from a certain point all new cases will be on CMS2012.

Alpine

The main difference is you will pay more. It also allows the government to increase taxes without affecting how much maintenance is paid to the PWC.

These are the rates for CSA3:

(1) Subject to sub-paragraph (2), the basic rate is the following percentage of the non-resident parent's gross weekly income— .

12% where the non-resident parent has one qualifying child;

16% where the non-resident parent has two qualifying children;

19% where the non-resident parent has three or more qualifying children.

(2) If the gross weekly income of the non-resident parent exceeds £800, the basic rate is the aggregate of the amount found by applying sub-paragraph (1) in relation to the first £800 of that income and the following percentage of the remainder— .

9% where the non-resident parent has one qualifying child;

12% where the non-resident parent has two qualifying children;

15% where the non-resident parent has three or more qualifying children.

(3) If the non-resident parent also has one or more relevant other children, gross weekly income shall be treated for the purposes of sub-paragraphs (1) and (2) as reduced by the following percentage— .

12% where the non-resident parent has one relevant other child;

16% where the non-resident parent has two relevant other children;

19% where the non-resident parent has three or more relevant other children.

source: http://www.legislation.gov.uk/ukpga/2008/6/schedule/4

RedSky

Alpine wrote: »

It also allows the government to increase taxes without affecting how much maintenance is paid to the PWC.

Increase taxes? Surely you mean it is an incentive for parents to make their own arrangements? CSA3 introduces charges so the taxpayer only subsidises the CSA instead of picking up the full cost. If parents choose to use the CSA to collect CM then NRPs pay more and PWCs receive less.

Alpine

RedSky wrote: »

Increase taxes? Surely you mean it is an incentive for parents to make their own arrangements? CSA3 introduces charges so the taxpayer only subsidises the CSA instead of picking up the full cost. If parents choose to use the CSA to collect CM then NRPs pay more and PWCs receive less.

Parents will make their own arrangements. Of that there is no doubt, but how many PWCs do you think will look at the CSA calculator and then accept anything less than that from the NRP?

Zero.

The CSA recommend that NRPs and PWCs making their own arrangements sit down every 6 months to work out what the needs for the children will be. But as we all know, the CSA doesn't work on "need", it works on percentages and that is exactly what all PWCs will stick to.

So I think my original point still stands. The government will be able to increase taxes, without reducing child maintenance payments, which I expect will put some NRPs into serious financial hardship.

RedSky

Alpine wrote: »

Parents will make their own arrangements. Of that there is no doubt, but how many PWCs do you think will look at the CSA calculator and then accept anything less than that from the NRP?

Zero.

The CSA recommend that NRPs and PWCs making their own arrangements sit down every 6 months to work out what the needs for the children will be. But as we all know, the CSA doesn't work on "need", it works on percentages and that is exactly what all PWCs will stick to.

So I think my original point still stands. The government will be able to increase taxes, without reducing child maintenance payments, which I expect will put some NRPs into serious financial hardship.

Am lost. What is the link between CM and tax?

Alpine

RedSky wrote: »

Am lost. What is the link between CM and tax?

The OPs original question was what are differences between CSA2 (net pay) and CSA3 (gross pay) schemes.

With CSA2, an increase in taxation would reduce the amount paid in maintenance as the percentage was calculated after tax was deducted.

With CSA3, maintenance is calculated on your gross pay. So your maintenance remains the same even if the government increase the amount of tax you pay.

PreludeForTimeFeelers

Alpine wrote: »

The main difference is you will pay more.

Not necessarily - it all depends how much your current income is. Higher paid NRPs will pay more under the new 2012 scheme than under CS2, but below-average income NRPs will pay less.

Alpine

PreludeForTimeFeelers wrote: »

Not necessarily - it all depends how much your current income is. Higher paid NRPs will pay more under the new 2012 scheme than under CS2, but below-average income NRPs will pay less.

Some basic calculations on a £25,000 salary for someone with 3 children:

CSA2

£25,000 Gross is
£19,362 Net x 25% =
£4,841 CSA

(tax calculation done at http://www.uktaxcalculators.co.uk/)

CSA3

£25,000 Gross x 19%=
£4,750 CSA

So that's a decrease of £91 a year or 2% for an average earner.