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No. In fact the existence of the notional income variation was unknown to me until a few weeks ago when I learned that my ex was applying for such a variation. She works for the CMS so knows what can be applied for and had also during our separation gone through all my financial documents and emails (I found photos of the same on my iPad - her google photos was still on there).
Had I known about this variation (and the intent of my ex to apply for it) I would have restructured my finances to use the ISAs to pay down my mortgage, so that I didn’t even have this money as an asset. However I am relying on the discretion of the CMS case worker to believe my arguments.
To StayPositive
Definitely ask for mandatory reconsideration. Even if does not change anything it keeps the door open for an appeal.
if CMS have assessed a notional income of £20K then they have decided your savings are £250K. Even that amount in a long term fixed deposit bond would not produce 8%. However, the powers above have set the rate at 8% which was the same as CSA under the 2003 scheme.
Reading the consultation papers on this subject suggests that the % was selected in the basis of prompting those with high value assets to pay more child maintenance as a penalty for trying to be a smart [censored] in the first place. For those who are worth millions or billions I can see the logic, but for mere mortals it seems harsh.
Some might consider £250K in the bank to be a lot. However, if it is all what someone has who needs to house themselves it is not a huge amount taking into account property prices, legal costs and that property will require furnishings.
Also, in your case the savings are from the split of matrimonial assets. Don’t know the details of your divorce (and don’t need to), but guessing that your share was based on reasonable needs to house yourself. That’s a bit different to someone who already has a home and at same time had £250K in the bank.
As soon as you have made an offer on a house inform the CMS that the capital no longer exists and that the child maintenance needs to be re assessed. Your primary home cannot be classed as an asset to which notional income can be applied.
@stayposi Agree with MysteryTrip - if you think you have a case against the initial decision then there is nothing to lose from a MR, and as MT says if that doesn't change anything you can then appeal to HM Courts and Tribunals Service.
As soon as you have made an offer on a house inform the CMS that the capital no longer exists and that the child maintenance needs to be re assessed.
Interesting - so if the asset no longer exists then this can be reflected 'real-time' so to speak in the CM calculation ? In my case then - if my ISAs are subject to a notional income calculation I can then decide to restructure my property finances (to use those funds to pay down my mortgage) and that would render the notional income calculation at zero (at least from that point going forwards) ?
Or - even better - if the six individual ISA funds that I have are treated as separate assets I could just move funds out of those ISA funds which breach the threshold. Sounds too simple a way to avoid the notional income assessment ....
Hi
Based on one of my previous links, I don't believe you will manage to convince to treat the ISAs separately it's more the underlying assets eg all shares will be added together and all cash added together... I'm also sure the link mentioned that you can purchase a property using the funds to reduce liability too (if buy to let then asset is generating income and if main home then it is excluded) and I assume that therefore you can pay down mortgage and achieve same result especially if its as a result of a consultation with a financial advisor whose professional advice is to do so...
Ultimately as the CMS can't control where u invest it and therefore you could put it into a low interest paying account, likewise they cannot control what you do with the funds especially if tied to professional advice (therefore can't be diversion of assets/income in my opinion)... However, as previously mentioned, before doing anything, considering the amounts involved maybe get some specialist advice.
@Daddyup @Will99 Hi I’ve been reading this thread but haven’t found an answer to my questions so hope you don’t mind me butting in. If I have savings (e.g. for a deposit for a house) exceeding £31,250 but those savings are within a) a current account b) a stocks and shares ISA and c) a cash ISA, are any of these treated separately? Are the two ISAs considered as one “type” of asset? Or are the current account and cash ISA considered as one “type”? Also, if the ISA is a product of my earnings after payment of CM, then is it true (and fair) that I then have to pay another 8% of the ISA? In this scenario I’m paying CMS twice for the same money.
Finally, if I inherit a house and this inheritance is shared between two siblings, and my share is worth more >£31,250 when does this become my asset? As soon as I inherit it? When the house is sold? It seems logical to allow a sibling to receive my share of the house and then he can just transfer me my share in instalments and then I can overpay my mortgage with those instalments…
To take your queries in turn :-
I believe that a), b) and c) are all treated separately for the £31,250 threshold. I.e. if they each have £30k in them then no notional income is due.
I think there is a provision which says that if the asset is purchased from income that has already been assessed for CM, then the asset is exempt from the notional income calculation.
Regarding your inheritance of a house, I would have thought it becomes your asset when the deeds are in your name. However the notional income provisions also include assets that are 'owed' to you where there is a reasonable expectation that you will be (or able to be) given these assets 'soon' (or something along those lines). I.e. perhaps if you are the beneficiary of the estate but the executor has not distributed the assets yet, then these may be caught.
Yes I agree your suggestion about getting the money in instalments and using them to pay off your mortgage is a good idea. The notional income provisions do say that if a property is the asset and it has a mortgage on it, then the asset value is the property value less the mortgage debt. However I suspect you are referring to a cash asset (after sale of the property) and using that in instalments to repay your own mortgage - in which case yes that sounds a good idea to avoind having over £31,250 in one place.
I received a response from the CMS this morning with their decision about the notional income variation requested by my ex-.
Despite my arguments (stated previously in this thread) that the ISAs in question were solely to pay off the interest-only mortgage on my rented property and thus would not even exist had I chosen a repayment mortgage instead, and that this asset should be excluded on the grounds that I am already being assessed on the rental profits of the property to which the asset is inextricably linked, the CMS have in the end decided to include these assets in a notional income calculation.
However - they have based that calculation only on those individual ISA funds that by themselves breached the £31,250 threshold (which applied to two of the six ISA funds I have). Also they have based the calculation on the asset value as at the last annual review date (last November).
So I am really p*ssed off that they are included at all, but I guess it is not as bad as it could have been. Also it would seem that I am now able to restructure my finances to exclude these assets altogether from a future assessment :- either by changing my mortgage to a repayment mortgage and using my ISA money to pay that mortgage down, and/or by moving ISA money around between individual ISA funds such that no one fund breaches the £31,250 threshold.
In respect of the ISA funds that I have set aside for paying off the interest-only mortgage on the property that I let out (and on which I receive income from the profit thereon which is assessed for CM), I am currently arguing with the CMS that these funds should not be included in a notional income calculation on two grounds :-
a) Surely the choice I made ages ago on how to repay my mortgage (i.e. invest elsewhere rather than pay down the mortgage directly) should not have an impact on the CM amount I am required to pay today. I.e. to include these funds in a notional income calculation is unfair on the basis that had I chosen a repayment mortgage instead then these funds would not exist at all. I would have had a smaller mortgage and no ISA funds, so I am saying that the CMS should balance the ISA asset value against the mortgage debt value that they are designed to repay.
b) I am also arguing that para 34005 bullet 2 at the following link essentially means that 'If the NRP has an asset which is essential to an arrangement or entity from which the NRP receives an income, and that income is assessed for CM, then that asset is exempt from a notional income calculation'. Not sure if any of you agree with this interpretation ? https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1012626/volume-3-variations.pdf
I acknowledge to the CMS that I cannot actually prove that the ISA funds are for repaying my mortgage, and equally I understand that they cannot simply believe me just because I say so. I.e. that this is essentially a judgement call on their part which, due to the potential financial impact on both sides of the CM case, they need to take care in coming to a decision on. An approach that includes the asset in the calculation simply because there is no proof tying it to my mortgage is an approach that is biased against the NRP, and will surely lead the CMS to unfairly penalise NRPs in a lot of cases. For my case, I have suggested that my open and full financial disclosure of every asset I have, and the fact that they have sought and received 3rd party verification of the truthfulness of my declarations, demonstrates my integrity and honesty and should help them to make a fair judgement call re my ISA funds.
However most of all, for me it demonstrates just how full of issues and perhaps unfit for purpose a lot of the CMS processes and calculations are. My view of the notional income variation is that it should really only be used when there is evdience that the NRP is deliberately reducing their income, and there is no evidence whatsoever of that in my case.
@Will99 Hi Will99, keep fighting them mate, seems so unfair. How did you get on the pension issue, are they still trying to screw you over on that. I spoke to the most aggressive and unhelpful clown there yesterday, who could not a simple question. Seriously, these poorly trained people can have a say on how we sort our finances for our future is a mystery mate
@jgdad I'm waiting to hear back from the FIU on both issues - pension contributions and the notional income issues that they have ruled against me on. Not sure if it is worth even talking to them because they have already initiated the MR and that is not dealt with by the FIU. However I think they have made mistakes and I would ideally like them to admit that - that might help me in the MR as I am sure the MR would look for compelling reasons why the FIU decision should be overturned and an admission of mistakes by them would suit. I have two threads running on here - one for each issue - but they are both part of the same story.
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