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CMS, overtime & 25%...
 
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CMS, overtime & 25% income increase

 
(@fightingback1991)
Active Member Registered
I am currently paying child maintinance through direct paybfor 3 children (which I believe is 19% of my gross annual income) I am currently assessed on my annual income using HMRC employment data. The application was made at the start of the year so its based on at the moment tax year 2021 - 2022.
I've been avoiding overtime like the PLAUGE so I don't hit the 25% threshold for income change as I'm worried I will end up with some massive arrears. Due to payrises, bonus and overtime I could easily breach the 25% income threshold for the tax year my calculations are based on (2021 - 2022 which is now two tax years ago!)
 
I have a question as I would like to do overtime but don't want to build up arrears or be paying more than what I'm actually earning.
 
Question
 
Firstly I understand we SHOULD report to the CMS as soon as our income reaches the 25% change mark. What if I don't?
 
If at the annual review they see my annual income is  25% more current income on the  calculation will they look to backdate it to the year it happened as well as up my payments for the new calculation if that makes sense or do they just take the HMRC figure each year and disregard if it is 25% more or not and just use the latest tax year figure for the calculation and job done.
 
I'm worried I'll do a shed load of overtime I'll end up with massive arrears. I've come up with the idea of saving 19% of any overtime I do to cover the following years CMS increase meaning essentially my overtime will be paid for so to speak and I won't need to find extra money. The issue will be is if they try and they backdate the date of change from the annual review to the start of the last tax year in which I earn 25% more for example?
 
I hope thus makes sense. I have no problem in paying more if I earn more, as I said above I'd save it away for the anticipated rise.
 
I guess my question really is will the CMS backdate a 25% increase if it is seen at the annual review?
 
Thanks in advance!
Quote
Topic starter Posted : 09/06/2023 12:40 pm
(@dadmod2)
Illustrious Member

Hi,

If you have permanent PAYE job then they expect you to report change if income increases or drops by 25% or more. If you don't report thr increase then they like to backdate from the date this  change happened, and you end up paying much more because of arrears.

ReplyQuote
Posted : 12/06/2023 8:12 pm
(@fightingback1991)
Active Member Registered

@bill337 

 

This is where I get confused. If I don't report it, it'll eventually get picked up in my annual review so I can't avoid them finding out & I'm not trying to divert or hide income. 

 

My question is more of a thing around the annual review. My understanding is at the annual review they just do an automatic check on HMRC last full tax year and use that. Regardless of if its high or lower, they just use that figure and job done. Therefore no arrears.

My plan is to save xx% of my gross overtime wage for the next annual review so when it is picked up then I'll have the money saved away if that makes sense. 

 

I'm not convinced they'll backdate anything unless it's done inside the annual review dates?

 

Hope this makes sense & someone can clarify. 

ReplyQuote
Topic starter Posted : 12/06/2023 8:34 pm
(@hrabbit)
Estimable Member Registered

@fightingback1991 Whilst it could be as you said, i have also experienced in the last 2 years them seeming to pick up on an increased salary payment and acting upon it. I am not sure if this was my ex requesting or if they just did a periodic check as they say they can do. 

I believe if they pick up on increased earnings during the year, it will be backdated to when the increase(above 25%) happened.

I am not sure what happens if you dont declare and they just do annual review. Perhaps they do only adjust for the new year, or maybe they backdate. No one can be certain with CMS! 

ReplyQuote
Posted : 13/06/2023 10:04 pm
(@dadmod4)
Illustrious Member

I think, in theory, there is a fine if you fail to disclose, so you are best doing so, and these days, PAYE is reported to HMRC monthly, so it's entirely possible that CMS are being fed this automatically (would make sense really). 

If you have been avoiding overtime, that implies that you don't need the money now, in which case, you could look at doing overtime and putting that extra income into a pension, that way it's legitimately excluded from the maintenance calculation.

ReplyQuote
Posted : 23/06/2023 11:23 am
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