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I was just doing some quick sums as I am considering taking a pay cut...
Basically when I done the sums I worked out after tax etc etc i will be £161 a month worse off than I am now however when I calculated this on the CMS calculator it would only be £28 less than what I pay now - this just doesn't seem to add up to me and any information / clarification would be much appreciated. CMS themselves are of no help as all I seem to get from them is 'computer says no'.
I struggle to pay as it is now - £400 odd for one child is hard to take!
Thanks in advance ..
Whats your specific question?
Its hard to figure out the situation without more info on the figures.
In principle however you pay 12% child maintenance.
If you earn £30k per year you pay £300 per month
If you take a a 17% pay cut you would earn £25k per year and you would pay £250
So the 12% you pay remains the same.
Your earnings have gone down by 17% - and so as the amount you pay to CMS.
I am guessing you are on about £40k - and assuming you are not paying by collect and pay then that would give about £400 a month.
If you are on collect and pay then about £34k would be about £400 a month.
If you are saying you would be £161 worse off then guessing the pay cut would take you to £38k a year ish.
In which case that would give a CMS payment of £381.
In which case you have gone from £40k to £38k - which is a 5% pay cut.
You have then gone from £400 per month to £381 per month - which is also a 5% reduction.
Guessing some of this based upon your figures as i'm not sure what is pre/post tax, or what tax you pay etc etc. ( I am guessing the £161 is probably after tax, but I can't be bothered to reverse that to do it fully - CMS calculations are done pre-tax)
However on the face of it the figures you have said do not some to be to wrong.
If you pay £400 now and your payments are dropping by £28 then that implies you are taking a 7% pay cut - if that is approx correct then the calculations look correct.
I used this calculator: https://www.gov.uk/calculate-your-child-maintenance/y/pay/1_child/none/732/0/0
You can also use this site for the tax side of things: https://listentotaxman.com/
I am assuming that you expected the CMS reduction to be bigger - but what were you expecting and why?
Hello JH1419
Child maintenance is worked out based on your taxable gross annual income (later converted into a weekly figure), which is your income before Income Tax and National Insurance are taken off, but after occupational or personal pension scheme contributions are taken away.
The Child Maintenance Service (the Government's statutory child maintenance service) also apply one of four different rates depending on the amount of your weekly gross income, as well as taking into account the number of children are currently living with you (or you are also paying child maintenance for).
If you have a private arrangement set up currently, you can negotiate between yourselves how much maintenance should be payable after taking into account your pay cut. The Child Maintenance Options website has a lot of helpful tools that can be used to help you discuss this with the other parent.
You can access these on their website www.cmoptions.org.
Not only will you find the online calculator, which calculates an amount of maintenance that the Government would consider to be a reasonable amount, but you will also find a list of guides that can help with negotiation. The Talking About Money guide and the Discussion guides in particular can give you an idea of how to approach this with the other parent.
If you have a case in place with the Child Maintenance Service or the Child Support Agency, you may wish to speak with them directly as you have done, to enquire further about how they work out child maintenance in these situations.
If you would like any further information and to receive a more personalised service, please feel free to contact Child Maintenance Options directly via their website.
Regards
William
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