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Good morning all,
I am a single dad to 3 teenagers who live with me full time. I have a 19 yr old with no income and for whom his mother provides no maintenance. I have two other teens, both in full time education, who receive maintenance from their mother.
My ex has recently received an inheritance of around £400,000.
Should this be taken into account by CMS in any way as a variation? And if so, how?
Thanks.
Unfortunately not as it is not taxable income, I got some inheritance about a month ago (although it was only about £10k) and I did not have to disclose to the CMS.
However the interest that is received on the £400k may be taxable if it totals over £1000 in a tax year. Bbut the rules changed on this a few years ago, and it is up to people to report this in a tax return, as tax is not taken at source anymore.
Thank you. That's helpful.
I know a big chunk of it is in the value of the exes late mother's house. The rest is cash in the bank and stocks and shares. I think the house is due to be sold. I wonder if the sale of the house would generate any tax the CMS would take into account?
Only inheritance tax, that is not linked to the individual tax account. this comes out of the estate.
Unlikely to be much, if any, inheritance tax.
This may give a slight glimmer, but not much:
Where an assets variation was made, the paying parent would be deemed to be earning income of 8% from his assets, so long as they were worth more than £65,000. There were complicated rules on what assets could be taken into account, and the figure of 8% could be reduced if it was just and equitable to do so. That ability is not available under the new gross income scheme.
The assets ground of variation sat uneasily with the rest of the scheme. The approach of the whole scheme is based on the assessment of income, rather than capital. Also the CSA were ill equipped to assess the value of property, and this generated a large number of appeals. Under the new gross income scheme parents will instead, be assessed, by way of an 'unearned income' variation, on the income that their assets actually produce. So in the case of a rental property, they will be assessed against the rent rather than the value of the property. In the vast majority of cases that will produce a simpler and fairer outcome than imposing an arbitrary 8% deemed income based on the property's value.
In Green v Adams (Rev 1) [2017] EWFC 24 (03 May 2017), the father presented as penniless, but there were about £5million of assets held by discretionary trusts or companies, which the mother said should be taken into account. Mostyn J found that the trustees of the discretionary trust would follow the father's directions, and that, even though the majority of the shares in the companies were held by the father's adult children from a previous relationship, the companies were in reality under the father's control. Accordingly, the judge found that £5million was available to meet the mother's (modest) claims under Schedule 1 of the Children Act for lump sums. At the end of the judgment, Mostyn J noted that the father had recently been assessed under the new gross income scheme, and had been told that he only had to pay £7 per week. The judge bemoaned the removal of the assets ground, and called for its reinstatement.
Taken from http://www.familylawweek.co.uk/site.aspx?i=ed188397
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