[Solved] Dividends

Yes. They will not be part of your initial assessment, so only your salary will be used for the calculations, however on the assumption your ex asks for a reconsideration based on unearned income, the dividends showing will then be used.

That is my experience anyway......

Thanks for the quick reply. That is harsh. I guess there is no advantage to be self-employed these days.

Thanks

Don

I suppose it depends how you view it. You could pay yourself minimum salary to still have NI apply, which is £8632 I believe, and pay maintenance on that, but then pay yourself £100K in dividends.

So paying around £85 per month for a 100K+ salary, which doesnt seem fair. Just using as an example.

I was self employed and benefited to a degree, but my ex quickly switched onto the variation for unearned income, so the dividends were included. You do have some flexibility to not pay yourself everything you earn, and leave it in the company, but also to be careful it is not excessive, otherwise you will find yourself investigated for diversion of income!

They have it pretty well covered these day.....

yes they are pretty clued up. when I had my company, one time my accountants didn't assign myself a salary. So when CMS checked my records, they saw zero and told me I don't have to pay anything lol. I rang them up and told them i took out £22k in dividends so assess on that. ex was confused by their letter, that how can I have nothing when I have been working and paying for a barrister in court.

I don't mind paying for my daughter but what they have calculated seems excessive. I better spend the dividends before they take them as savings and ask me for more money next year. 🙁

if you mean spending dividends by taking out more money, then that only increases your dividend figure, so you would have to pay more in maintenance in. there's been some cases when it went to tribunal and they saw that there's e.g. £50k sitting in the company doing nothing. so they calculated maintenance on that.

The Dividends you never take leave within the company pays for solicitor bills / Vat / Tax etc as long your within tolerance they cannot even with a variation.
That's my understanding as money is there to pay VAT/TAX they can not calculate in within your salary.

Posted by: @HRabbit

Yes. They will not be part of your initial assessment, so only your salary will be used for the calculations, however on the assumption your ex asks for a reconsideration based on unearned income, the dividends showing will then be used.

That is my experience anyway......

I wanted to understand this a bit more. I'm unable to find any details from CMS where they "include" dividends paid through self employment in their calculation. I have seen they do not include these in their assessment, only gross income subject to NICs / income tax. 

I currently pay myself via an LTD paying the standard £8k salary (which is subject to NICs/income tax) and top it up with dividends of up to £50k each year - all of which is disclosed via my SATR. When the yearly HMRC data comes through (which is passed onto the CMS) their calculation is only based on the 8k despite me disclosing that i also draw 50k in addition, so it is quite clearly visible to them. 

Anyone know why this is? I am aware that the other parent can open up a variation order (if they have proof) but i guess this requires a lot of digging if you're not on speaking terms with the other parent.

Does anyone have an official calculation the CMS based their payments on and are dividends purposely ignored?

Thanks!

@mike-small Hello Mike, I came off the forum many months back but was alerted to your post by an email notification. I looked at my own bleating about sharing CMS and dividends etc with my ex, when I was still relatively ok and thought it not relevant to most on the site and they probably thought i was a t****r 🙂 So I came off.

To answer your question however, CMS only seems to take the dividends into account IF your ex asks for a reconsideration/variation based on unearned income. If she does not ask, CMS only use your salary to calculate, even if you tell them about the dividends. But in the absence of her request to reconsider, they ignore. I did exactly that and they ignored until my ex went for the reconsideration and only then did they include.

She does it every year; they first award(April) based on the 8k salary, so she gets next to nothing, but then she contacts them, asks for variation on unearned income and they then add my 50K dividends and adjust in May. So I am almost exactly the same position as you from a financial perspective.

It does seem bizarre, because CMS can see the earnings but for Resident parents that do not know they need to claim what is rightfully theres, they are left with scraps.

Hope this helps.

@mike-small I used to be LTD. One time my accountants didn't bother assign me a salary, because I didn't pay them to do it. So when CMS assessed me, they told my ex I have zero income. So I rang them up and told them about my dividends, which they classed as unearned income, and based my maintenance on that. I would suggest to always disclose it. Because if ex chases CMS about it, can cause lot of problems for you.

Posted by: @HRabbit

@mike-small Hello Mike, I came off the forum many months back but was alerted to your post by an email notification. I looked at my own bleating about sharing CMS and dividends etc with my ex, when I was still relatively ok and thought it not relevant to most on the site and they probably thought i was a t****r 🙂 So I came off.

 

To answer your question however, CMS only seems to take the dividends into account IF your ex asks for a reconsideration/variation based on unearned income. If she does not ask, CMS only use your salary to calculate, even if you tell them about the dividends. But in the absence of her request to reconsider, they ignore. I did exactly that and they ignored until my ex went for the reconsideration and only then did they include.

 

She does it every year; they first award(April) based on the 8k salary, so she gets next to nothing, but then she contacts them, asks for variation on unearned income and they then add my 50K dividends and adjust in May. So I am almost exactly the same position as you from a financial perspective.

It does seem bizarre, because CMS can see the earnings but for Resident parents that do not know they need to claim what is rightfully theres, they are left with scraps.

Hope this helps.

Thanks @HRabbit for you reply, it's much appreciated. Never worry about what people think of you, they never truly know what you're going through having never walked in your shoes. Some ex's are OK and you can work out things amicably and some are very difficult and cause you stress by trying to squeeze every penny out of you.

I am aware that CMS have access to this data (disclosed divs on SATR) and the ex can at any point ask for a reconsideration/variation based on unearned income. My understanding is that she would require some sort of evidence to prove this and present it to CMS before they would entertain such a request? However, in my circumstance this is not really something she could prove as we've not spoken or had contact in over 14 years. It's just a case of paying the maintenance monthly and we have both got on with our lives. It was a holiday fling that has haunted me ever since! 

In my situation, I'm about to stop working via an LTD and go back to PAYE. However, my concern is that if I still take out dividends (as have funds left in the company) on top of a PAYE salary, the gross taxable earnings will go through the roof! so not sure if they would include the dividends taken along side a salary, would you know how that works? happy to discuss offline if you are free to discuss?

Thanks