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What Counts as Earnings?

By: Lorna Elliott LLB (hons), Barrister - Updated: 7 Sep 2018 |
 
Earnings Csa Cms Maintenance Child

The CSA/CMS calculates child maintenance payments on the basis of your income. One of the options for enforcement is taking a deduction from your earnings in order to satisfy your child maintenance payments. A Deduction from Earnings Order (DEO) is a secure method of collection of child maintenance as it is paid directly by the employer of the non-resident parent to the agency, which then passes it on to the resident parent.

How Do DEOs Work?

DEOs work in a very similar way to Attachment of Earnings Orders, which are used to collect debts for things like county court judgments and fines. You should be aware that it is not up to your employer as to whether they should deduct earnings from your pay or not. It is a discretion of the CSA/CMS, and if an employer fails to cooperate with a DEO then they can be prosecuted and may also be required to pay a fine.

What Are My 'Earnings'?

It is sometimes confusing as to what ‘earnings’ actually are for these purposes, and it can leave you wondering how much of the money you receive will be deemed to be your earnings as regards child support payments.

For the purposes of the CSA, earnings are the funds that are taken into account after the deduction of income tax, national insurance contributions and pension contributions. Pension contributions must be regular, and lump sum payments are unlikely to count. If in doubt, you should seek advice on this.

Money That Is Not Classed As Earnings

Money that an individual receives that are not classed as ‘earnings’ include: statutory payments made by an employer for reasons of maternity, paternity, redundancy or adoption pay; tax credits; social security pension, benefit or allowance, any payments made under a disability pension or benefit; or a guarantee payment under social security pensions legislation. If you receive any of these kinds of payments and they are your sole income, your employer cannot use this payment to deduct child support from your earnings.

Money That Is Classed As Earnings

Employers can however deduct money from the following types of earnings: private pensions, occupational pensions; wages; overtime pay; bonuses; commission; or any payments that are made on top of a person’s wages. In addition, it is possible to deduct from an individual’s statutory sick pay. If your employer pays you ‘contractual’ maternity, paternity, redundancy or adoption pay, this is classed as ‘earnings’ and can be subjected to deductions for child maintenance.

Difference Between Contractual And Statutory Pay

The difference between ‘contractual’ and ‘statutory’ in these circumstances is that for contractual pay, the amount that you are paid is determined by your contract with your employer. ‘Statutory’ pay is a minimum amount of money to which you are entitled by law. Contractual pay is therefore higher than statutory pay. If you are receiving contractual pay in these circumstances, the deduction cannot be so high that it eats into your statutory pay.

If you are on statutory maternity, paternity or adoption pay, you may be subject to deductions from your earnings once you choose to return to work. This may be on a voluntary basis, or you may be required to do so.

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[Add a Comment]
hi reading above, I am still very confused by the CMS and the way that things are calculated. I earn 34k / yr and yet HMRC have detailed I earn £39k. I have since discovered that this is due to BiK for my company car. in order to have the car which I need for my job, as I travel across the North of the country. without the company car I could not complete my work. but nevertheless, the car means I have a reduced tax code but if I have a reduced tax code, that mean I paya higher rate of tax. so when they add the additional 5k to my wage, I am being taxed and then charged for the purposes of CM calculations. hit TWICE! without seeing any monetary value for it...I can be the only one who does not understand.
JJJL87 - 7-Sep-18 @ 1:56 PM
Hi I received a "discretionary payment" from my employer to settle a whistleblowing detriment claim that I lodged with ACAS during the course of my employment. As part of my settlement agreement I agreed to leave employment and received the payment several days after my termination date. HMRC have ruled that the amount is not subject to income tax. I am no longer working and I am using the settlement to support me through a couple of years of study at university. Is this settlement payment classed as income for the purposes of child maintenance?
nutes - 17-Aug-18 @ 10:08 PM
Thanks for the reply Russv, I appreciate you taking the time to help me. Unfortunately looks like another case of someone who works for this agency and doesnt know how the rules work. Thanks again
BMC - 30-Jul-18 @ 7:40 PM
@BMC - CMS use figures from the year previous in line with HMRC, your payments should drop the year after.
Russv - 30-Jul-18 @ 10:49 AM
Hello there looking for advice if what i have been told is true please ? I am a "non resident parent with Care" I earned 40k in 2016/17 with overtime etc, and paid all my due amountshowever recently changed to a salaried job and took a small hit in wages to 36k per year for 2017/2018. I have now came up for annual review in August and the CMS say my payments wont change as i am within the 25% rule !! My latest P60 says 36K but CMS say they will continue to use the 40K from the year previous. Surely this cant be correct ? I tried to explain this to the CMS rep but they assured me it was correct and reffered me to my local MP !!
BMC - 28-Jul-18 @ 4:06 PM
I have been divorced for 6 years and beenpaying my ex regular maintenance payments. I recently left the armed forcesdue to a medical discharge. My ex claimed part of my military pension as part of divorce. When I left the armed forces I started getting a monthly medical pension. Do i now need to add my medical pension to my salary for child maintenance to be calculated considering she has already claimed some of my pension as part of divorce. Please help
Devoted dad - 26-Jul-18 @ 9:31 PM
Hi, my ex pays £240 per month for our son. This week he txt me to say he's been off sick from work and therefore he will not be paying a penny! He says he's been receiving statutory pay and he doesn't know how long he will be off for so not to be expecting anything until further notice.. is this right? He is due to pay in the 21st of every month so I have to wait 5 working days to contact CSA but he said he's called them and they told him not to pay until he's well enough! Really?
French85 - 22-Jun-18 @ 8:27 PM
Beth - Your Question:
At present my ex pays £200 A month through a family based arrangement for one child (he pays less than he should). He will be retiring next year and has said that he will have to reduce what he pays each month. He earns around £46,000 a year. I believe he is paying into a private pension scheme but cannot be sure. Will the CMS be able to find out if my ex has a private pension? through his employer as I feel I'm best to get them involved before he retires and leaves his place of employment.

Our Response:
CMS go by HMRC figures on taxable income. If your ex has income coming in then CMS will assess him on this.
ChildSupportLaws - 22-Jun-18 @ 2:32 PM
At present my ex pays £200 A month through a family based arrangement for one child (he pays less than he should). He will be retiring next year and has said that he will have to reduce what he pays each month. He earns around £46,000 a year. I believe he is paying into a private pension scheme but cannot be sure. Will the CMS be able to find out if my ex has a private pension? through his employer as I feel I'm best to get them involved before he retires and leaves his place of employment.
Beth - 22-Jun-18 @ 2:17 AM
Gotcha - Your Question:
So are you saying they won't take into account other forms of income? This is a threat he's been using for 4 yrs and has now seen it through.

Our Response:
Only 'taxable' income in the form of earnings is taken into account. However, if you feel your ex is trying to sideline income, then you may wish to seek professional legal advice as a court can look into the non-resident parent's income in more depth.
ChildSupportLaws - 15-Jun-18 @ 9:20 AM
So are you saying they won't take into account other forms of income? This is a threat he's been using for 4 yrs and has now seen it through.
Gotcha - 14-Jun-18 @ 12:01 PM
Gotcha- Your Question:
My ex husband is a company director but has yold CMS he only earns £225 a week. HMRC have no record of earnings for him. During a finance dispute his solicitor accidentally sent me his bank statements and he paid £13,300 in company loans between 21st feb and 20th mar but received £17,810 under repayment of loan in that time. Is this classed as income?

Our Response:
Only income that is taxable is classed as earnings in terms of child maintenance payments.
ChildSupportLaws - 12-Jun-18 @ 2:38 PM
My ex husband is a company director but has yold CMS he only earns £225 a week. HMRC have no record of earnings for him. During a finance dispute his solicitor accidentally sent me his bank statements and he paid £13,300 in company loans between 21st feb and 20th mar but received £17,810 under repayment of loan in that time. Is this classed as income?
Gotcha - 9-Jun-18 @ 11:58 PM
@Colmum - only if the income is taxable will your ex have to pay.
Jen78 - 8-Jun-18 @ 1:38 PM
My ex husband proposes to leave his current job to take up teacher training. I understand that he will qualify for a bursary of 26k and he seems to think that this will not be income for the purposes of Child supportis this right?
Colmum - 7-Jun-18 @ 4:57 AM
Hi, My ex wife is paying just £12 a week for our 2 children based on her declared earnings of 7k a year. Yet recently at court she had to produce 12 months bank statements and she has earned on top of her 7k a further 18k. I believe this is cash in hand on a part time business she runs but she has told the CMS financial investigation Unit that its money given to her from friends & family to help her out. Can the CMS take cash payments from friends & family into consideration? I am confident it is from her business and have evidence to back it up but would appreciate an answer as to whether they can base a calculation on this ‘help from family’ ?
Lobby - 25-May-18 @ 3:17 PM
Tjr - Your Question:
I have just found out that my ex received a bonus of 30k in 2011. He didn't declare to csa. Is it too late to raise this.

Our Response:
You can still contact CSA, please see link here. If the bonus is taxable it will be taken into consideration if you registered a claim before 2011.
ChildSupportLaws - 24-May-18 @ 2:13 PM
I have just found out that my ex received a bonus of 30k in 2011. He didn't declare to csa. Is it too late to raise this.
Tjr - 22-May-18 @ 8:08 PM
skint - Your Question:
Hi,i have been earning 20k a year on top of my basic salary due to working A LOT of overtime as I was buying a new house, I had a personal agreement with the mother but she has decided to contact CMS and now they want an astronomical amount off me each month which without any overtime isnt humanly possible for me to live. how do I get round this? I was paying her exactly what the government calculator worked out based on my basic salary but now she wants a cut of my overtime which ive put my live on hold to earn.whats the deal?

Our Response:
Child maintenance is based on all your earnings (not just your basic income) and assessed via income tax paid via HMRC. If your income changes i.e you stop working overtime, then you can refer the matter back to CMS. However, the assessed figure must go up or down by at least 25 per cent for CMS to look again at your payments, please see link here. On the basic rate, if you’re paying for one child, you’ll pay 12% of your gross weekly income, two children, 16% and three or more 19% of your total weekly earnings.
ChildSupportLaws - 9-Apr-18 @ 2:51 PM
hi, i have been earning 20k a year on top of my basic salary due to working A LOT of overtime as i was buying a new house, i had a personal agreement with the mother but she has decided to contact CMS and now they want an astronomical amount off me each month which without any overtime isnt humanly possible for me to live. how do i get round this? i was paying her exactly what the government calculator worked out based on my basic salary but now she wants a cut of my overtime which ive put my live on hold to earn. whats the deal?
skint - 8-Apr-18 @ 8:41 PM
@Paddy - good point. In terms of CMS it is still classed as gross earnings and CMS don't take your living expenses into account. I'd ask CMS directly and if you can I'd like to know the answer as I live in London and never thought about that aspect.
Sam - 29-Mar-18 @ 10:49 AM
What about London Allowance and London Weighing ? My salary is higher by almost 7k pa because of that. Is it still added to the gross salary. If yes, then why?
Paddy - 28-Mar-18 @ 12:51 PM
I may be finishing work on IHR with a payment of 20k. Can my cms take this money off me or will they just look at taking money out of my job seekers allowance?
Citywill - 26-Feb-18 @ 4:20 PM
Deano - Your Question:
I have been paying CMS from my account to hers not a problem but I receive a notice to say I could cash in part of a pension and received the money now is this classed as earnings for the CMS to make caluations from please

Our Response:
As outlined in the article, child maintenance is based upon taxable earnings. You can see more regarding what is classed as taxable and non-taxable earnigns via the link here, which should help answer your question further, if this article hasn't.
ChildSupportLaws - 16-Feb-18 @ 3:04 PM
I have been paying CMS from my account to hers not a problem but I receive a notice to say I could cash in part of a pension and received the money now is this classed as earnings for the CMS to make caluations from please
Deano - 16-Feb-18 @ 1:43 PM
TQ - Your Question:
I’ve been paying csa for year at agreed amount, they have changed to cma and so re calculated and are now wanted to take money from company car allowance the tax man adds to my wages to be able to tax me to pay for the car and so will now be hit twice and so have to pay my ex for having a car? It doesn’t make sense but they are now threatening me with sedition if earning? Can I appeal the car allowance being used as an earning?

Our Response:
You can see what counts as 'earnings' via the link here, which should help answer your question.
ChildSupportLaws - 23-Jan-18 @ 11:40 AM
I’ve been paying csa for year at agreed amount, they have changed to cma and so re calculated and are now wanted to take money from company car allowance the tax man adds to my wages to be able to tax me to pay for the car and so will now be hit twice and so have to pay my ex for having a car? It doesn’t make sense but they are now threatening me with sedition if earning? Can I appeal the car allowance being used as an earning?
TQ - 22-Jan-18 @ 8:52 AM
Hi, For the last three years I send all my SIPP payments through to the CMS and everyone they do not take them into account. I believe this is because they are not “occupational” Recently my employer enrolled me into Smart Pension - this acts in exactly the same way as my SIPP so I am expecting the same treatment. My confusion is - I read on numerous websites that ALL pension contributions need to be taken into account and a recent FOI request to DWP stated that private pension contributions should be taken into account. I would be grateful for you view?
Dilbert - 23-Dec-17 @ 12:42 PM
Clarelousmith - Your Question:
My ex partner is out of work due to an accident that has left him currently disabled and unable to work until he's fully rehabilitated which could be years, he will be receiving an insurance payout in excess of £400,000, my question is, as he is now unable to work will his child support payment for our child now stop as he no longer has an income from work? Because this is what he has told me

Our Response:
Child maintenance payments are based on taxable income and earnings. Insurance benefits paid if a person is sick, disabled or unemployed to meet their financial commitments are generally classed as non-taxable, please see CAB link here .
ChildSupportLaws - 22-Dec-17 @ 10:42 AM
My ex partner is out of work due to an accident that has left him currently disabled and unable to work until he's fully rehabilitated which could be years, he will be receiving an insurance payout in excess of £400,000, my question is, as he is now unable to work will his child support payment for our child now stop as he no longer has an income from work? Because this is what he has told me
Clarelousmith - 21-Dec-17 @ 5:36 PM
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