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Gross Income Scheme

  • jammin35
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01 Aug 12 #346643 by jammin35
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Im just trying to get my head around the new scheme.

My salary is £75280 per year, giving me a net income of £4203.

I have 3 children with my ex wife and one living with me (new partners daughter).

Therefore presently I reduce my net income by 15% and then pay 25% on the remainder.

This gives me a sum of £893.

Under the new gross income scheme, my weekly gross income is reduced by 12% for the child living with me, giving a total of £1270. Of this figure:

For the first £800, 19% or £152 is due
For the remainder, 15% or £71 is due.

This is a total of £222.5 or £964 per month.

So the new scheme increases my costs by £73 per month?

This is a particular frustration to me as I have to commute to London. The CSA will allow a derisory reduction inassessable income of 10p per mile over the first 150 travelled per week, but because I am so far from London I have no choice but to lodge up there, so I get no reduction but a travel cost of nearly £900 each month. This is nuts because if my family was still together, this £900 would not magically return to my pocket. It is what it is, but no less frustrating! If I worked locally, they''d be lucky to get £400 a month.

Do we know when the GI scheme is due to come into force?

James.

  • MrsMathsisfun
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01 Aug 12 #346648 by MrsMathsisfun
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No one seems to know when it will happen, think they are waiting for new computer systems to be put in place! but the impression seems to be that old cases will not transfer to new system straight away.

Do you already have an agreement?

  • WYSPECIAL
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01 Aug 12 #346662 by WYSPECIAL
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Bear in mind the CS1 cases that were supposed to migrate to CS2 nearly 10 years ago are still waiting so it may never happen.

It may also be possible to pay for your ticket through a salary sacrifice scheme thereby removing that money from your gross pay. Worth asking your employer?

Also you don''t seem to have deducted any pension from your gross salary in your calculations. 100% of contributions are allowed so if you are not currently in a pension scheme you ought to seriously consider it.

  • Fiona
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01 Aug 12 #346666 by Fiona
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I think though that''s it''s unlikely to take anything like 10 years to migrate all the cases this time. First of all there has been more preparation for the change. Secondly, more parents are making their own arrangements and when charges are introduced the CSA case load is likely to reduce making it easier to administer. Thirdly there is a defined timescale. Even if it takes longer than expected I can''t see migrating cases taking anything like ten years.

  • jammin35
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01 Aug 12 #346682 by jammin35
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Hi,

At present i pay under a court order which was agreed as part of the divorce. Because i am self employed i pay a budgetary £1000 per month and then a "top up" at year end. This is actually fairly generous in that i have never sought to reduce it based on 1 night a week i have the kids. I was stupid enough to pay the top up three months before it was due, because now i am facing a drop in income within the 12 months validity of the court order and could have paid a lot less, but them''s the breaks.

This drop in income (enforced because of the downturn) comes with the need to work away from home to make ends meet. Hence, the discovery that my maintenance commitment will be more under the new scheme than the old is disappointing.

I had planned to continue paying the £1000 per month until January, when the court order will be 12 months old, then convert to a voluntary agreement. I can''t be bothered going to court before then, i''ve spent enough on solicitors. I had offered £800 per month, using the fact that my step daughter lives in the house, and i travel more than 150 miles per week, to get the figure down to what i think is fair (ie, 25% of my net income after my travel expenses are paid).

However, my ex has not accepted this (and to be fair why would she if there is more on offer).
It is what it is and there is little point in moaning although its a shame the majority should suffer for the minority of horror stories on here. I was just trying to understand if my calculations sounded correct, particularly as the legislation suggests that the amounts paid should be similar.

There is another scenario that i will fall foul of because i currently am a company director and receive dividends. I''ll still owe nearly £3000 in tax at the end of January, which will be deducted from my pay next year. The net income scheme would take account of my earnings being lower, the gross income scheme will not. So the tax on the dividends that i paid her in this financial year will be entirely payable by me next year.

I really think that the child maintenance people should be allowed to take extenuating circumstances into account. It seems crazy that my ex wife''s household, where only one person works and for just 24 hours a week, should have the same income, when maintenance is taken into account, as mine does, despite us living in private rented accommodation that is twice the price as hers, and despite me having to make a lot of sacrifices to earn that maintenance in the first place. Deducting the cost of a standard class season ticket from my assessable pay is not unreasonable; taking the view that it is possible to travel the 240 mile round trip to London 20 days each month for £2.25 per journey is clearly lunacy :-).

James.

  • mumtoboys
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01 Aug 12 #346689 by mumtoboys
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James,
forgive me if this is patronising cos I think that''s how it will sound and it''s not my intention.

You''re self employed and you earn well. You are supporting your children at CSA levels (or above if I''m reading correctly). You are no doubt aware that you could, with some legal, clever accounting, reduce your maintenance liability considerably. Just be proud of yourself that you''re not one of those self employed NRPs who relinquish all financial responsiblity of their children whilst enjoying 6 holidays a year with your ''new'' family. Don''t get hung up on a calculation and what is a relatively small difference in what you''ll be legally obliged to pay. The way the new CSA scheme is going to work means that both NRP and PWC are going to have to pay for the priviledge of using them as a collection service - if your ex has an ounce of sense, she''ll realise she''s onto a good thing. She might kick off and shout a bit but if she does, do direct her here and to other child maintenance forums where she''ll see read horror story after horror story of self employed NRPs getting away with paying nothing. Failing that, I''ll go round and see her myself and tell her not to be so daft!

Keep your eye on the bigger picture. A few pounds here and there are not going to make a difference in the grand scheme of things.

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01 Aug 12 #346695 by u6c00
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jammin35 wrote:

I had planned to continue paying the £1000 per month until January, when the court order will be 12 months old, then convert to a voluntary agreement.


I may be misunderstanding but if it''s a court ordered maintenance agreement, I wouldn''t have thought the new CSA system will affect the amount of money you pay? In effect the CSA are not part of your arrangements.

Unless your ex decides that she can get more money by going through the CSA that is?

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