Home > Earnings & Deductions > What Counts as Earnings?

What Counts as Earnings?

By: Lorna Elliott LLB (hons), Barrister - Updated: 19 Sep 2017 |
 
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/CMS, 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]
@Broken - I don't think CMS will do anything if you're off for a short period of time. I'd ring them up and find out.
MooseJ - 19-Sep-17 @ 3:58 PM
Hello I have just started work for a new company and as such do not receive sick leave. I have just broken my foot and can not drive etc so will be on statutory sick pay. Will the CMS change my weekly payment or should I leave my employer as I'm on a weeks notice period?
Broken - 19-Sep-17 @ 7:41 AM
Hello I'm thinking of leaving work and traveling around Asia etc for up to 6 months. I currently pay via CMS calculation directly to the mother. If I have income form rented rooms in my home but keep a room for my personal belongings etc would any room rent be taxable I understand the first £7500 is tax free under the rent a room scheme.
Away - 19-Sep-17 @ 7:37 AM
Dinky - Your Question:
I had to sell my home and give my ex £50,000 does any of this money count towards his money earnt or is it purely earnings as an employee

Our Response:
This would not count as earnings. The only earnings that count in a child maintenance application are earnings which are taxable.
ChildSupportLaws - 8-Sep-17 @ 11:57 AM
I had to sell my home and give my ex £50,000 does any of this money count towards his money earnt or is it purely earnings as an employee
Dinky - 7-Sep-17 @ 4:32 PM
My 'jobs need' car appears on my wage slip as a Notional Payment, this amount doesn't appear in the make up of my salary as I don't receive a penny of it. I pay tax on that Notional amount and I have to pay all my private fuel. Why is this Notional amount added to my salary for the purposes of the CSM calculation? I'm paying money to my ex that I don't actually earn? Why doesn't the CSM do the smart thing and just use Taxable earnings as the basis for their calculations?, thus eliminating grey areas and making it an all round fairer system... My mortgage, my bills and everything else I have to pay for in life is paid for with my earnings... notional payments are not disposable income.
MNO - 22-Aug-17 @ 12:35 PM
bella - Your Question:
My ex work visa has run out so he nolonger works however he has gone and got married to a British citizen and is now on a spouse visa will I still get maintenance from him? as it's his wife which is now supporting him and she has 2 children from her previous.

Our Response:
Yes, you are still entitled to claim child maintenance foryour children, unless he has stopped earning and if so the child maintenance will be recalculated to take this into account.
ChildSupportLaws - 21-Aug-17 @ 3:38 PM
Myex work visa has run out so he nolongerworks however he has gone and got married to a British citizen and is now on a spouse visa will i still get maintenance from him? as it's his wife which is now supporting him and she has 2 children from her previous.
bella - 18-Aug-17 @ 12:14 AM
If my sons dad is off work on statutory sick pay for two weeks will he still have to pay any maintenance? Or will it just be classed as arrears and spread over the following months?
Pemstar - 1-Aug-17 @ 9:05 PM
ElephantsGerald - Your Question:
I was widowed aged 28 and receive a monthly payment from my late wife's company as an annuity. As far as I can see the "rules", this is not earned income. I am not a retired person, so it is not a pension, and I am not a pensioner. Neither is it a payment from "my" annuity. Due to the fact I receive £1,100.00 per month, I receive absolutely nothing from the State. However, the CMS have decided to take 11% gross from this sum, as an award to my daughter's mother. My rent is £650 per month and I am currently running at a negative of £250 per month. The question is whether what I receive is "earnings" or not? I have no issue paying my dues, but if I was entitled to ESA, my payments would be £7 per week. I feel I am being punished for having a legacy, that was afforded me, way before I met my child's mother?

Our Response:
A person would usually pay tax automatically on life annuity payments, at a rate of 20%. Therefore, if the amount is taxable, then it is considered an income. If you think this payment is unfair, then you can appeal/complain via the link here.
ChildSupportLaws - 11-Jul-17 @ 11:53 AM
I was widowed aged 28 and receive a monthly payment from my late wife's company as an annuity. As far as I can see the "rules", this is not earned income. I am not a retired person, so it is not a pension, and I am not a pensioner. Neither is it a payment from "my" annuity. Due to the fact I receive £1,100.00 per month, I receive absolutely nothing from the State. However, the CMS have decided to take 11% gross from this sum, as an award to my daughter's mother. My rent is £650 per month and I am currently running at a negative of £250 per month. The question is whether what I receive is "earnings" or not? I have no issue paying my dues, but if I was entitled to ESA, my payments would be £7 per week. I feel I am being punished for having a legacy, that was afforded me, way before I met my child's mother?
ElephantsGerald - 10-Jul-17 @ 6:21 PM
Mortified Father - Your Question:
THIS IS A WARNING to all Father's paying CMS who after reaching the age of 55 may be considering taking a Lump Sum from their Pension Pot!!If you do cash in a Pension Pot then I can 100% assure you that it definitely is taken into consideration by CMS when your Annual review comes up.My Annual Review letter arrived today with a massive uplift in my next 12 months of payments.I called CMS to query this as I had called them earlier in the year to question as to whether cashing in a pension pot would or would not be taken into account.The answer I received back then from the CMS was; 'No it would not be taken into account by the CMS' and so I went ahead and made serious financial decisions based on that advice.The answer I received TODAY when I queried the calculations was; 'Yes, it is taken into account and you were ill-advised (by the CMS) earlier in the year'.So, please BEWARE!!

Our Response:
Much depends upon what type of pension it is and whether it can be classed as earnings. If you were told otherwise, you can complain via the gov.uk link here.
ChildSupportLaws - 30-Jun-17 @ 11:58 AM
THIS IS A WARNING to all Father's paying CMS who after reaching the age of 55may be considering taking a Lump Sum from their Pension Pot!! If you do cash in a Pension Pot then I can 100% assure you that it definitely is taken into consideration by CMS when your Annual review comes up. My Annual Review letter arrived today with a massive uplift in my next 12 months of payments. I called CMS to query this as I had called them earlier in the year to question as to whether cashing in a pension pot would or would not be taken into account. The answer I received back then from the CMS was; 'No it would not be taken into account by the CMS' and so I went ahead and made serious financial decisions based on that advice. The answer I received TODAY when I queried the calculations was; 'Yes, it is taken into account and you were ill-advised (by the CMS) earlier in the year'. So, please BEWARE!!
Mortified Father - 29-Jun-17 @ 5:33 PM
@Fairnessisonlyright - Child maintenance is based upon earnings and if your ex has no income, then he is no longer liable to pay child maintenance even arrears.
RubyTue - 27-Jun-17 @ 3:53 PM
My ex is in arrears through non payment of child maintanence . He now has given up work as he is on statutory pensionable age . He has no private pension . I'm told the arrears can not be forcibly recovered even at £1 a week . How can this this be correct ? It seems to be a big loophole .
Fairnessisonlyright - 27-Jun-17 @ 1:39 PM
Rojr1977 - Your Question:
Hello, if you opt out of a company car, and receive a payment of a "car allowance " of £6600 PA , is this classed as income and included with net wages income? Thank you

Our Response:
You would have to ask CMS directly regarding this as it is quite a grey area. Much depends upon whether it is classed as taxable.
ChildSupportLaws - 26-Jun-17 @ 12:26 PM
Hello, if you opt out of a company car, and receive a payment of a "car allowance " of £6600 PA , is this classed as income and included with net wages income? Thank you
Rojr1977 - 23-Jun-17 @ 7:32 PM
Nikky - Your Question:
My ex is unemployed and always refused to pay maintenance as says cannot afford it - refuses to say how much money he has.He is not on benefits as savings level too high.Has income from shares and private pension.Can you find out what he earns and can this be classed as his income and assessential made for maintenance?

Our Response:
If your ex has any income, then you can make a claim via CMS here.
ChildSupportLaws - 12-Jun-17 @ 12:57 PM
My ex is unemployed and always refused to pay maintenance as says cannot afford it - refuses to say how much money he has. He is not on benefits as savings level too high. Has income from shares and private pension. Can you find out what he earns and can this be classed as his income and assessential made for maintenance?
Nikky - 10-Jun-17 @ 11:54 PM
I work away Monday to Friday and have my child every Saturday over night. I recive lodge money on my pay slip every week and I believe you have been using this as part of my income when it is not this is used for me to live in London whilst at work. Can you please explain how you have worked out what I pay as you have stated on my last review I earn £999per week when in reality £250 of this is used so I have a roof over my head?
Ben - 4-Jun-17 @ 4:56 PM
Hi, If I take a lump sum from my pension pot. Will this impact on mycms direct payments to my ex. That is will it be added to my yearly review, When being assessed for next year's payments.
Bronc - 27-May-17 @ 4:34 PM
If I take a lump sum out of my pension,will this impact on my CBS yearly review?
Bronc - 27-May-17 @ 4:16 PM
the cms isnt a fair company at all they have brought to my knees i first heard from them in march 2017 after saying ill get a loan to clear arears (from her being on benifits i got a big bill for the goverment ) which i paid off in full i have 2 other young children cms put them on my claim then took them off again with out any reason then said they dont live with me ? ? dont know how they worked that out then decided to back date arears to september 2016 at a high rate plus 20%on top everytime i question why they change my keyworker so i never get anything worked out ive always paid her direct but we had a falling out as she wanted me to pay her the goverment debt and was outraged when she didnt get a penny of it so she told cms i havnt been paying her even tho ive go ALL payments on bank statements they have taken her side and refuse to look at my statements and are seeking bailifs against me to pay a debt i dont owe i really cant take any more from these people and will be at blame for many deaths where fathers cant cope with life because of them
him - 24-May-17 @ 3:09 AM
I have a mutual agreement in place for access and maintenance. We live 130 miles apart and were meeting every second weekend half way. Nowe my sons Mum wants £40 per month for travel costs. Where do I stand. I pay the appropriate level of maintenance for my situation.
Torquil - 12-May-17 @ 2:13 PM
I have just changed jobs, now I recieve "tax free" food and over night allowance at work, will these monies be taken into account by cms?
Royb1982 - 4-May-17 @ 3:20 PM
Willi- Your Question:
Hi I'm about to get a medical discharge from the army. Will my invalidity pension be taken into account for child support payments ? Thanks

Our Response:
As specified in the article, any payments made under a disability pension or benefit are not counted as earnings and therefore not made assessible by CMS.
ChildSupportLaws - 4-May-17 @ 12:45 PM
Hi I'm about to get a medical discharge from the army. Will my invalidity pension be taken into account for child support payments ? Thanks
Willi - 3-May-17 @ 6:51 PM
Hi there, looking for some guidance. I'm a father paying for one child. I've had a lot of stress and worry caused by CSM lately due to phantom arrears they say I owe, 1k to be exact. I was on a collect & pay scheme and was charged 20% on top of my payments, now on direct pay to mother. The arrears arose after an argument with my ex over her spending on nights out and me arguing the fact the money was for our son not the p1$$, it was £50 per week I paid. she then decided to go CSM to shut me up and get one over as I have never not paid and I always would pay. However, they had on their records my old employment wage and dictated I should of paid £85 per week up until Christmas then the new payment of £56 per week in January onwards, with extra added on to pay arrears to the sum of £320 per month. Now, I've been in my current employment since 2014 so my wage hasn't changed but CSM refused to adjust this and I'm left with arrears, hence my view of these being "phantom" The other issue I have is they have me down as earning 5k annual, this is due to me having a company vehicle that I pay tax on. Question is, this is a benefit provided by the company so I can drive around the uk carrying out my work commitments and I don't see this 5k Is this right, can they take this into account?? I've just had a new born, 6week old and I'm on my knees, I have debts/bills and new family to support and just think this isn't right. I would never not pay and pay fair but feelim being had and it's really bringing myself and my wife down. Any advise or guidance on this would be greatly received. Thanks, Nick
Nick - 20-Apr-17 @ 11:06 PM
LMAC - Your Question:
My ex is director of his own company where it is only him who works for it. He is a contractor and earns at least £500 a day. He pays himself basic wage monthly with a dividend once a year. He pays me maintenance from that but I don't feel this is enough. He also owns several flats( most have mortgages) but gets rental income from this. Am I able to claim for more than what he is giving me? He will not give me more when I ask but don't want to lose out and end up with less as he has been very calculating. Any advice would be good.

Our Response:
It might be worth seeking advice from Child Maintenance Services regarding this, as it is impossible to assess without knowing the full details. The CMS will take your ex's full income into consideration, this involves any income made via renal property.
ChildSupportLaws - 18-Apr-17 @ 12:18 PM
My ex is director of his own company where it is only him who works for it. He is a contractor and earns at least £500 a day. He pays himself basic wage monthly with a dividend once a year. He pays me maintenance from that but I don't feel this is enough. He also owns several flats( most have mortgages) but gets rental income from this. Am I able to claim for more than what he is giving me? He will not give me more when I ask but don't want to lose out and end up with less as he has been very calculating. Any advice would be good.
LMAC - 17-Apr-17 @ 7:15 PM
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