The income 25% rule

DennisTenus

I understand that the CMS will only adjust the amount due if the income of the paying parent goes up or down by 25% and they would require this to change for 12 weeks.

So what is stopping the paying parent reducing their income using pension contributions by lets say 26% for a few months, applying for the re-adjustment with the CMS, then adjusting the pension contributions again by 24% (so under the 25% notification range)?

Comms69

DennisTenus wrote: »

I understand that the CMS will only adjust the amount due if the income of the paying parent goes up or down by 25% and they would require this to change for 12 weeks.

So what is stopping the paying parent reducing their income using pension contributions by lets say 26% for a few months, applying for the re-adjustment with the CMS, then adjusting the pension contributions again by 24% (so under the 25% notification range)?

Potentially nothing. But that's only mandatory reconsideration. They can still update this at the year end anyway

DennisTenus

Yes, but there would potentially be several months of lower payments? until the next annual review anyway....

Comms69

DennisTenus wrote: »

Yes, but there would potentially be several months of lower payments? until the next annual review anyway....

yes potentially.

BAFE

Nothing stopping you from doing that but obviously the kids will have less won't they?

daddydodo

That'll work unless you're paying your pension by salary sacrifice.

With regards to the kids having less? Well maybe the PWC is rich and the OP poor, this way he can pay her less and spend the money himself on his children.

DennisTenus

daddydodo wrote: »

That'll work unless you're paying your pension by salary sacrifice.

With regards to the kids having less? Well maybe the PWC is rich and the OP poor, this way he can pay her less and spend the money himself on his children.

It is paid by salary sacrifice, why wouldn't it work in that situation? I can adjust the % percentage month by month if I want to.

The main problem is because I do a lot of non contractual/not guaranteed overtime and on-call which varies wildly month by month and is reducing and may go altogether without warning but won't be quite as much as 25% decrease and I can't afford to still pay the same maintenance in that situation, so I'd reduce it to over the 25% by using pension contributions.

daddydodo

DennisTenus wrote: »

It is paid by salary sacrifice, why wouldn't it work in that situation? I can adjust the % percentage month by month if I want to.

...because to make the change you'll need to prove it by sending 2 monthly payslips & your payslip will not mention any deduction for 'Pension' ; your pension contributions in this case come from your gross salary and will probably be referenced as 'Salary sacrifice'. So when CMS agent reviews your payslip they'll presume you are not paying ANY pension, and rather than your CMS payment reducing it will be quite the opposite and actually increase.

If you change your contributions back to 'non salary sacrifice' then you will have your pension deduction defined & listed on your payslip & then you'll be free to make changes to your pension% up or down. But remember on your annual CMS review they'll calculate whatever your average payment was over the previous 12 months.

DennisTenus

No, my payslip does mention deduction for pension. It is all Salary sacrifice so comes off the gross but is there with other deductions for TAX and NI etc. I don't change it between Salary sacrifice and non Salary sacrifice at all.

So i'm confused why you think they wouldn't take this into account?

daddydodo

Don't be mixed up between the gross pension payment and salary sacrifice from gross salary. You can normally sacrifice salary for many items including pension and in my experience it is all listed as 'Salary sacrifice'. Maybe check with your payroll dept.

DennisTenus

As I said, it is salary sacrifice, but just says pension on my payslip and the CMS take it into consideration. They even asked me if I pay into a private pension scheme as they would take that into account as well.