[Solved] Change of circumstances

hi,

i signed up with CMS a few months ago. they have a 25% rule. if your income goes up and over 25% then you have to pay more. if your income drops by same percentage, you pay less in maintenance. on the phone they told me that if my income goes up and i dont tell them, then i am committing an offence and can be prosecuted.

so if i were you, I would tell them as soon as you start your new job or after your first pay slip arrives. as soon as i find out that my incomes increased or dropped, i will not wait 1 year for review date, will ring them right away.

be careful with them. e.g. your on a higher income, and if CMS see that you were getting that higher amount for past 6 months, then 99% chance they will re-calculate your payments, work out the difference and this will involve back-dated payments.

Thank you, Bill337. Looks like I would need to tell them soon after I start new work and bite the bullet of paying an extra £120 p/m. Or of course take the risk and wait till next year and pay the difference backdated (if they flag it) whatever that might be.

By the way, the data CMS gets from HMRC is from April-to-April, right?

I would only tell them if your wages will go up 25% or more over a 12 week period. If they are just above the 25%, why not put some in a pension scheme to keep it under?

Interesting, Yoda. Hadn't thought of pension scheme.

My weekly gross income will be up by approx 28% hereon compared to last year, which in monetary value is around £176 p/w. Whereas an increase of 24% (under 25) in monetary value is around £151 p/w. The difference between £176 and £151 is just £25.

If decided to invest £25 into pensions, it would be £25*52/12=£108 pcm

Therefore to remain under 25% I should probably £108 p/m into pensions? Sorry, I am not asking for any tax or financial advice but have I understood correctly to remain within 25%?

Yes you are correct. However personally I would put more than needed into the pension to give a bit of a buffer, just in case of any small overtime payments received etc. What would be horrible is if you are literally £1 over the 25% limit and you will get stung.

If I were you I would put as much as you can afford into your pension for now (say giving you a 10% pay rise) then over the next 12 - 18 months gradually decrease them. Remember that you are assessed by the main HMRC figure at the start of each case year, so you must stay within 25% of this.

What you will be wanting to do is to keep this years P60 figure from 2020 within 25% of the 2019 figure.