[Solved] Company car and earnings for maintenance calculation

Same here, i get a car allowance which i use to buy my car on finance. But as i pay tax on it, they include it in my earnings. I tried to discuss with them that it wasn't fair to include this, but they do anyway? If i don't have a car, i don't have a job!! I thought they would just base it on my basic salary, but they don't 🙁

Adonaldson

Do you have to have a company car, or could you manage with your own car? If you can manage with your own, is it worth considering buying your own, which would obviously cost you in loan repayments but it would reduce your tax liability as well as your maintenance liability. You may be able to claim mileage from your employers (I think this is exempt from the child maintenance calculation if the mileage is below 18,000 miles per annum - but I'm not certain about that, so can anyone confirm this?). Your employer is suddenly not paying for you car, so you can agree to them paying this into your pension under a salary sacrifice scheme, which will save them some money with reduced employers NI, and because it's going into pension, CMS won't include it in your pay calculation. If you can do this, it might be worth setting up a separate pension pot for this, so that at age 55 (at present), you could take 25% tax free cash from that if you wanted.

As always, I'm not qualified in any way with this, so you'd definitely need to take professional financial advice before taking any action.

Hi, that’s great advice because a mileage allowance scheme is definitely an option for us. I’ll look into whether we can do anything in the pension front.

As I said, I'm no more than a layman here, so you definitely need professional advice before you do anything, but hope it's given some possibilities.

Hi - are we sure that taking that 25% tax-free lump sum from a pension is not subject to Child Maintenance? It might be considered exempt from tax and therefore not included in CMS taxable income calculations, but on the other hand it might be deemed to be taxable at 0% and thus included!?

That's a very valid point, and I'm not sure of the answer. The ideal situation is to pay into pension which would reduce the salary for CMS calculation and take out the lump sum after you have finished paying maintenance, but to answer your question fully in case you want the lump sum earlier, I think you'd need a definitive answer from CMS - even though the sum is tax free, HMRCS are notified about this, so I'd be inclined to think that it's taxable at 0% rather than untaxed.

You definitely need professional advice on this.

OK

On this bit regarding pension tax free lump sum “ even though the sum is tax free, HMRCS are notified about this, ‘ - is it certain that CMS would see this? I’m not sure it would appear automatically on P60 so maybe they would see it after it was declared on a tax self-assessment form or something?

Sorry I have not been that involved with this thread. Have you tried speaking to or messaging CMS about their position on this?

I remember reading cases in past where someone retired and receiving pension. They still owed child maintenance so the pension money was included in maintenance calculation.

On this bit regarding pension tax free lump sum “ even though the sum is tax free, HMRCS are notified about this, ‘ - is it certain that CMS would see this? I’m not sure it would appear automatically on P60 so maybe they would see it after it was declared on a tax self-assessment form or something?

I'm not certain about this by any means, I know when I cashed in a pension about 4 years ago, initially taking the tax free 25%, and then later the balance, when it came to do my self assessment online, the figures were already on there for the cashed in pension, so I'm assuming that the pension company must notify inland revenue. What CMS see of that I'm not sure, so best to check so no nasty surprises in the future.

I think a number of us are interested in the answer, so please put it into the forum once clarified.

I am 55 and in theory could take take my not so big 25% tax free lump sum now, but as I have 4 years of paying maintenance to come, I had assumed I would not do it until the CMS obligations are finished. So would be good to know if it is an earlier option.