When the Child Maintenance Service considers an individual’s income for the purposes of calculating how much money they will pay, it can look at several sources of income. But do savings count as income in child maintenance calculations?
When the Child Maintenance Service considers an individual’s income for the purposes of calculating how much money they will pay, it can look at several sources of income. But do savings count as income in child maintenance calculations?
If you have a family law issue and you require legal advice to understand your options, contact specialist family law solicitor Joanne Major. Joanne is the founder of her specialist family law firm and has spent her 25-year legal career specialising in family and matrimonial cases.
What income is taken into account for child maintenance purposes?
Any income from employment, self-employment and investments is considered when making a calculation about how much child maintenance should be paid. This includes income from bonuses, commission, or overtime. Essentially, any taxable income from other miscellaneous sources may count as income. This may include casual income from one-off jobs, royalties, and any other income from intellectual property, such as sales of patent rights, for example.
Income is capped at £156,000 or £3,000 per week before tax (at the time of writing), and is the maximum income that will be taken into account. For anything over this amount, it may be possible to make an application to court for top-up maintenance. An order for top-up maintenance requires the paying parent to make payments over and above the Child Maintenance Service calculation. This does not remove or replace that calculation, but is payable in addition to it.
Are savings counted as income and what other types of income can be considered?
You can ask the Child Maintenance Service to look at its maintenance decision if the paying parent is believed to have additional income that was not considered first time around. Both the paying parent and the parent with care can apply for a variation at any time, either before or after child maintenance has been worked out. An additional income variation application can be made for the following:
- Unearned income – this could be rental income from property or land, dividends and interest from savings and investments. This type of income must be at least £2,500 per year. So whilst the capital of the savings is not necessarily taken into account in its own right, any interest over £2,500 per year (at the time fo writing) can be considered as income in a calculation for child maintenance. Although there are certain investments that are exempt, see below for more information.
- Notional income from assets – this is income that is calculated on certain types of valuable asset of £31,250 or more. In this case, a notional income of 8% will be ascribed to the paying parent.
- Diversion of income – this is where income from the paying parent is being diverted to another person or used for another purpose, meaning it is not included in the original child maintenance calculation figures
Are there an investments that are exempt from child maintenance calculations?
The following investments are not considered in child maintenance calculations:
- Interest, dividends, or bonuses from an individual investment plan such as an ISA
- Income from a certified save as you earn scheme
- Income from national savings certificates and tax reserve certificates
- Venture capital trust dividends
- Tax-exempt annual payments made by a UK based individual not for commercial reasons
- Periodic or annuity payments of personal injury damages
- Annuity payments from a Criminal Injuries Compensation Award Scheme
- Gains from dealing in certain commodities, options, and financial futures
- The capital element of purchased life annuities
- Tax-free health and employment insurance or immediate-needs annuity payments
Can any costs incurred by a paying parent be deducted from a child maintenance calculation?
You can ask the Child Maintenance Service to consider certain costs or expenses that you may pay. This can reduce the gross income figure that they used to calculate child maintenance payments. These include:
- Boarding school fees
- Costs of travel to and from contact visits
- Overnight stays – if the child stays with the paying parent for an average of 1 night per week, this can reduce child maintenance payments
- Additional costs for children with special needs
- Making mortgage payments on the former family home that they receiving parent and children live in
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