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Hi
My understanding is that anything in your ISA is not income generating for the purposes of income tax and therefore does fall under notional income variation rules. Even outside of an ISA, whilst the dividends are taxed the underlying asset wouldn't be and therefore would again fall under notional income variation rules. Otherwise you could just buy non dividend paying shares..
The below has a good summary and explanation although consider that the legislation is so wide ranging that its impossible for anyone on this forum or on various websites be able to advise you specifically on your circumstances due to the complexities it involves.
https://classlegal.com/news/challenging-a-nil-assessment-by-the-child-maintenance-service-part-two
@Daddyup That link is very informative, thanks.
From what is stated therein, it seems that my ISAs should not be included in a notional income calculation as long as I can convince the CMS that they are for repayment of my mortgage. Eg. 1 it is stated that the net value, i.e. after any mortgages are deducted, is what should be assessed, and Eg. 2 it also states that anything that generates unearned income should not also be assessed from a notional income perspective.
So convincing the CMS of the link seems to be important here.
There is also the requirement for any notional income assessment to be ‘just and equitable’ though seems to leave this judgement to the discretion of person(s) processing the variation request.
The Just and Equitable caveat does not seem to have any clear guidelines. However, the legislation states that if an asset had to be sold to pay additional child maintenance then it will not be considered as an asset that has a notional income.
Do you have something in writing with the lenders of the mortgage regards a repayment mechanism that referenced the ISAs? Might help with the CMS?
Do you have something in writing with the lenders of the mortgage regards a repayment mechanism that referenced the ISAs? Might help with the CMS?
No I don’t, I recall a general statement along the lines that I had an appropriate repayment vehicle in place. In the absence of this I have tried to get confirmation of when I made my first investment in to the ISA wrapper - hoping to show that this was shortly after I obtained my mortgage. Ok not proof but the best I can do I think. However my ISAs were originally on a different platform to where they are now and the transaction history was not migrated over, and I am having difficulty tracing the original ISA platform company (nor have I kept paper statements from that long ago).
So I think I’ll have to rely on the CMS simply believing me, and since I have provided 100% full financial disclosure of absolutely all my assets, all with statements etc. including all current accounts, premium bonds, sharesave schemes, absolutely everything, even things that my ex- nor the CMS would have known about, I am hoping that I have demonstrated my integrity and honesty to them. Here’s hoping anyway ..
I have just gone through similar with CMS and provided all the information, the ex was successful in getting the variation through.
I have just had the letter from CMS today stating that they have decided to vary the order based on a notional income on my savings. I have a lump sum in my bank account after we sold the FMH in January and have not found a property to purchase as yet.
The CMS have had the bank statements showing that the interest I am currently getting is minimal and that I will be earning £300 a year in interest, but they have decided that they are going to add an additional £20,000 for 'additional income' to my current income. I would love to know which bank account they have the money in to be able to earn that interest rate!
I am happy to pay for my child, but now they are taking money from me that I am not even getting in the first place, it just seems wrong.
I pointed out to CMS in my letter that the money was from the sale of the FMH and I am currently looking for a property to purchase which I will then rent out and am happy to pay the money due on the rental income.
Would I get anywhere if I ask them to reconsider?
@stayposive If you look at the link that Daddyup provided earlier, it would seem to suggest that the CMS should incorporate the £300 interest in the calculation rather than do a notional income calculation. I.e. it suggests that where an asset is generating actual income, that income should be included in the assessment instead of the asset being subject to a notional income calculation.
https://classlegal.com/news/challenging-a-nil-assessment-by-the-child-maintenance-service-part-two
I agree it seems wrong that they can assess CM on income AND assets. There are provisions that if the asset has been purchased from income already assessed for CM then it is exempt from a notional income calculation, however it seems that if the asset was purchased from income received in a year before CM was in place then it is fair game for notional income. However this also seems unfair - it is effectively assessing you on income this year plus income from a previous year.
The notional income variation certainly is not watertight, and as someone else posted earlier on this thread I think it should primarily be targeted at people who are living off assets instead of income.
@Will99 I am planning on asking for a mandatory reconsideration on this, think I need to find an accountant first to see if in their opinion that the savings are income generating based on the interest earned, otherwise surely if the investment was not returning 8% they could claim it is an asset and should be recieving 8%.
Have you received any advice outside of this forum to advise yourself?
Hi
I think the issue here is that the matter is quite complex and appears discretionary too.
However, it's not as simple as saying just because the asset generates an income it should be excluded for notional income purposes. After all the CMS have no control over where and how you hold the asset. Eg if you have £100k in cash you could hold this in an account paying 0.01% interest when the highest paying account could be paying 6% (appreciate there isn't account paying this but I'm just using an example) Would this be reasonable? Or would it be depriving the receiving parent and ultimately the kids?
I think depending on the values concerned especially in your cases, seeking specialist legal advice may be the better option as the potential savings of over turning the CMS decision would out weigh any legal costs incurred.
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