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What Counts as Earnings?

By: Lorna Elliott LLB (hons), Barrister - Updated: 27 Jul 2019 |
 
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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Hi all,I receive an army pension(not a war or medical pension),my question is,is it classed as an income for child maintenance service? It is my only income as I'm a stay at home dad to my children I have with my 2nd wife,I'm asking as when claiming child tax credits recently they said I had been declaring my army pension and did not need too,confusing as they both government run. I'm thinking it is right but any info would be appreciated Many thanks.
Mr56 - 27-Jul-19 @ 8:16 PM
I need help please. what counts as earnings on a limited companies balance sheet accounts as its the only info that I can see on companies house? I can see drawn downs of 77,000 and dividends paid of 50,000 year ended Jan 2019. Is there still this loophole in the law for these Exes to get away with paying CSA or has it been closed?
Lost son - 9-Jun-19 @ 10:51 PM
Hi My sons mother complained to child maintenance about the amount she was getting she said hes on a 1000£ a week and drives a Mercedes so they got my p60 that started my earnings before tax was around 40 of thousand and are taking 148£ a week, I went against this and said you haven't take into account I get 200£ tax free lodge and I get 220£ tax free travel every 4 weeks so they said because that doesn't take you over the 25% legislation we cant look at it but the got the amount wrong in the first place, is this correct, surely they got it wrong first but when taken into account my lodge and travel it doesnt take it over 25% so no we are charging you on the lodge and travel? That's wrong isn't it, I also have a cout order that cost me over 5000 to get access it states that I get him for 38 nights a year but I can have him more and I do have him alot more and takes me over 52 nights a year but because she said no he doesnt that's it I cant get shared care reductions and I have to pay again in court to get it changed. This is ruining my life and career
Jonlee - 21-May-19 @ 1:23 PM
I have ran my own business for many years paying correct maintenance for three children. My business is closing down this year and my only income will be £625/mth rental profit. I am fortunate to have a father who wishes to pay me an allowance each month of £600 out of his excess income which attracts no income tax. Does this count as income regarding CMS?
Hartley - 4-May-19 @ 1:17 PM
Child maintenance are currently looking at my husband's income, he hasn't worked since 2013 due to disability, when we married 2015 he stopped getting money from ESA as I work over 24 hours per week, he does get low rate PIP. child maintenance said they cannot take money from PIP, only taxable benefits, they have said my husband earns £10.71 per week and has to pay £7 per week, the claim started February 2019, child maintenance said on HMRC the only income they can find is from April 2014 - April 2015 and that's what they've used to calculate weekly payments, we're very confused as the claim only started Feb 2019 and we thought they should use your current earnings not 4-5 years ago.
Julz1303 - 1-May-19 @ 10:01 PM
Is a compensation award classed as income and does maintenance have to be paid from it. I need this award now as I can’t work full time and l also can’t claim benefits. Don’t qualify as I can possibly do ‘some work’...
What the heck? - 4-Apr-19 @ 10:57 AM
how come the gov website says the oppisate when calculating your payments, as in it states your earnings are before tax and national insurance,?
mike - 3-Apr-19 @ 11:16 AM
Why does the CSA yearly review ask about pension payments? I just started a new job last year and I pay into an occupational pension scheme. Thanks
Stevie - 30-Mar-19 @ 2:38 PM
My ex wife signed a separation agreement, stating that she would not make a claim for my armed forces pension if I left her the house. She has now sold the house (£90,000 profit) and low and behold has now made an application to the CMS. They have calculated my pension into my payments, even though they have a copy of the minute agreement. This seems very wrong to me, is there anything that I can do?
Troy - 27-Mar-19 @ 7:39 PM
My ex husband earns a basic salary of £17,00”, with commission each month , last tax year he earns £27,000., previous year £26,000. So I’m presuming approx the same this year. Is commission taken into account when the csa work out maintenance payments? We have 3 children, thecare with me most of the time and approx 2 nights a week with dad. Thankyou
marsha47 - 14-Mar-19 @ 9:36 AM
My ex receives an injury on duty police pension of £2,900 a month nett. Child Maintenance has been calculated at £34 a week for 2 teenagers. This is only 5% of his take home pension. He has a nice life not working and goes on holiday to France skiing and to America a few times a year whilst I’m struggling financially supporting the kids (they live with me full time tho he does see them) and I work full time. How is this calculation proportionate, fair or right?
Parks - 8-Mar-19 @ 6:39 AM
Same as above, me and my ex have agreed on a set monthly maintenance agreement but I believe it is actually way under what I’m entitled to so am going to go through the agency but what I can’t seem to find is whether the stocks he sold to buy his flat will be taken into consideration?
One more push - 24-Feb-19 @ 11:32 PM
Hi everyone. Does anyone know whether stock/shares are included in the CM? I’m a single dad that still see my son a lot. I currently pay £300 a month through a family based arrangement. However, one day the Mum has decided she wants to go through CM now, which has come out of nowhere. I’m going to try and settle a figure instead, however want to know where I stand. I earn commission and have shares that vest each year, I’m shocked after researching she will get a cut of this?
Charlie - 19-Jan-19 @ 10:25 AM
Some advice please. My partner has been asked to pay an amount of child maintenance and arrears for his daughter that will leave him unable to pay his rent and bills per month. Surely CMS are not allowed to make someone homeless? They don’t seem to be interested in his outgoings, only his gross income. He really wants to pay maintenance for her but obviously at a rate he can afford. He has also had no access for nearly two years. What can we do? We don’t live together.
Sjh - 8-Jan-19 @ 2:14 PM
New claim this financial year :- My child maintenance is based by CMS on my previous taxable years earnings as I am a director of my Limited company and the CMS can only access these figures. My income this year is a lot less, as I am now paying monthly into a pension scheme which is taken off gross earnings,how will these higher payments I am now paying be refunded when my correct earnings for this year become available.
Puggy - 3-Nov-18 @ 10:14 PM
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
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