Child Maintenance and Tax Losses

tightauldgit

I haven't been able to find an answer to this question so thought I would ask here and see if anyone knows. 

I am self-employed and will record a profit this year which would be income for the purposes of CMS calculations BUT I have tax losses from prior years which the taxman will let me carry forward to reduce my taxable income to effectively zero. Does anyone know if CMS work on that net figure after the losses are taken into account or whether they will just take the top line profit number as my income?

So for example if I earn £10k and carry forward £5k of losses then as far as HMRC are concerned I only have £5k of taxable income. But do CMS work on the same basis? 

Does anyone know? I'll probably have to call them to find out but that's going to be an hour sitting waiting in a call center queue no doubt.

tacpot12

The note under section 20007 in this document suggests that your CMS calculation is based on taxable profit and says that this can be reduced by allowances for losses: 

 Volume 2 - Maintenance Calculations (Chapters 17-26) (publishing.service.gov.uk)

It makes the point that the rules around whether any losses can be used to reduce your tax bill are HMRC rules, not CMS rules.

If you are lucky enough to find that the CMS calculation of the child maintenance that you should be paying is zero, but you have made a profit in the last tax year, and can afford to make child maintenance payments, I would encourage you to do so as as you should be supporting your child whatever the CMS say.

tightauldgit

tacpot12 said:

The note under section 20007 in this document suggests that your CMS calculation is based on taxable profit and says that this can be reduced by allowances for losses: 

 Volume 2 - Maintenance Calculations (Chapters 17-26) (publishing.service.gov.uk)

It makes the point that the rules around whether any losses can be used to reduce your tax bill are HMRC rules, not CMS rules.

If you are lucky enough to find that the CMS calculation of the child maintenance that you should be paying is zero, but you have made a profit in the last tax year, and can afford to make child maintenance payments, I would encourage you to do so as as you should be supporting your child whatever the CMS say.

Thanks, that's a really useful document. 

Just for the record I do have my child 3 nights a week and pay for a lot of things anyway but the relationship with her mother is awful and her actions in the past few years don't give me any reason to be generous to her. I have no reason to think that any payment I make to CMS would benefit my child in anyway so I have no qualms about only meeting my legal requirements to her mother (and then spending money on her directly when she's in my care).