Nil assessment

PreludeForTimeFeelers

dirtystopout wrote: »

The only way that rental income can be assessed is if I take a wage out of it otherwise it can't be taken into consideration when making a calculation, that's why I got a nil assessment, I'm not making this up.

Isn't this what you're doing, though? You mentioned living off the income that you get from rentals, so surely this is a wage?

When I worked on self-employed cases, income declared to HMRC was used for calculations, what I'd generally find would be that once any mortgage/costs were offset against rental income there wasn't a great deal left as 'income'.

HoneyNutLoop

dirtystopout wrote: »

The only way that rental income can be assessed is if I take a wage out of it otherwise it can't be taken into consideration when making a calculation, that's why I got a nil assessment, I'm not making this up.

This is only true if the properties are owned by a limited company of which you are a director. If the properties are owned by you personally, the reason the income is not counted is because rental income is not classed as income for child support purposes for CSA2 (it is for CSA3 under an unearned income variation). Instead, on CSA2 the properties are considered under an assets variation.

They will need to arrive at your total personal asset worth, including things like savings and investments if you have them in addition to your properties, and then deduct off any mortgage secured against those properties. If you jointly own, they will need to establish in what proportion, and if s mortgage is secured they will consider whose liability that is; I.e. is it your mortgage, your co-owner's or both. They will then arrive at a net asset figure and if this is more than £65k the variation for assets will be awarded. You will then be assessed as having a notional income of 8% of the net annual value per annum and you will be asked to pay child maintenance on that.

So, on £65k net assets your net weekly income would be calculated as £100 and you would be liable to pay £5 a week maintenmaintenance (soon to rise to £7) ; £100k net assets = £18 a week maintenance (after flat rate increase will be £20); £200k net assets = £46 a week maintenance - all based on 1 child.

DUTR

HoneyNutLoop wrote: »

This is only true if the properties are owned by a limited company of which you are a director. If the properties are owned by you personally, the reason the income is not counted is because rental income is not classed as income for child support purposes for CSA2 (it is for CSA3 under an unearned income variation). Instead, on CSA2 the properties are considered under an assets variation.

They will need to arrive at your total personal asset worth, including things like savings and investments if you have them in addition to your properties, and then deduct off any mortgage secured against those properties. If you jointly own, they will need to establish in what proportion, and if s mortgage is secured they will consider whose liability that is; I.e. is it your mortgage, your co-owner's or both. They will then arrive at a net asset figure and if this is more than £65k the variation for assets will be awarded. You will then be assessed as having a notional income of 8% of the net annual value per annum and you will be asked to pay child maintenance on that.

So, on £65k net assets your net weekly income would be calculated as £100 and you would be liable to pay £5 a week maintenmaintenance (soon to rise to £7) ; £100k net assets = £18 a week maintenance (after flat rate increase will be £20); £200k net assets = £46 a week maintenance - all based on 1 child.

Interesting, as I thought it was 8% of the asset value eg £100k = £8k of income therefore £13 (rounded up) per week per £100k CS contribution.

HoneyNutLoop

The £100k asset figure gives a net weekly income of £153.85 (£8k as you say) which is the reduced rate. You therefore pay the flat rate for the first £100, which is currently £5 but will shortly be increasing to £7 + 25% (1 child) of the £53.85. So £5 (£7 in future) + £13 = £18 or £20 in the future.

dirtystopout

HoneyNutLoop wrote: »

This is only true if the properties are owned by a limited company of which you are a director. If the properties are owned by you personally, the reason the income is not counted is because rental income is not classed as income for child support purposes for CSA2 (it is for CSA3 under an unearned income variation). Instead, on CSA2 the properties are considered under an assets variation.

They will need to arrive at your total personal asset worth, including things like savings and investments if you have them in addition to your properties, and then deduct off any mortgage secured against those properties. If you jointly own, they will need to establish in what proportion, and if s mortgage is secured they will consider whose liability that is; I.e. is it your mortgage, your co-owner's or both. They will then arrive at a net asset figure and if this is more than £65k the variation for assets will be awarded. You will then be assessed as having a notional income of 8% of the net annual value per annum and you will be asked to pay child maintenance on that.

So, on £65k net assets your net weekly income would be calculated as £100 and you would be liable to pay £5 a week maintenmaintenance (soon to rise to £7) ; £100k net assets = £18 a week maintenance (after flat rate increase will be £20); £200k net assets = £46 a week maintenance - all based on 1 child.

Thanks for clearing that up, it's kind of confusing how they work out your calculation.

How about other expenses that should be taken into consideration? i.e. repairs and renewals, council tax on empty properties, electricity bills, property insurance to name just a few. these can't be ignored as they are legitamate overheads.

HoneyNutLoop

They are ignored as they are not allowable deductions for an assets variation under child support law.
This is a link to the regulations - number 18 applies:
http://www.dwp.gov.uk/docs/o-9321.pdf

Your assets are not treated the same under CSA2 as they are for tax purposes - they aren't trying to establish your profits - they are establishing the asset value and then calculating a notional income; this has now been aligned for CSA3 where unearned income info is directly drawn from HMRC from the last tax return.