Include dividends in CMS calculations.

[CMSdividend]

Hi, have n/c as ex knows old username and posting in AIBU for traffic.

I'm trying to get some evidence together of parents that have evaded supporting their children financially through setting up as limited companies, paying themselves minimum wage and claiming the rest of his income dividends. His company (of which he is the only employee) made a £50k+ profit last year.
My ex has just done this, was earning £50k+, I was receiving approx £650 per month. Now it's gone down to £34 a week. I'm going to have to sell the house, of which he'll also receive 30% of the £250k equity. I am not eligible for a mortgage.
I know I can appeal and will, but my appeal is likely to be unsuccessful. I have searched the .gov website for petitions and can't find one.
So, before I launch into campaign mode I'd like to know how many others on here this affects and whether you would help support a campaign if I was to start one?

Surely the child isn't missing out in the money as I presume the father will be spending money on them when he has them?

Did you benefit from the tax breaks and the process when living together and now your separated it is wrong

Is this a case of jealousy?

@Loveacoseynightin no, I didn't benefit in anyway when we were married. I was financially abused to the point where he wouldn't tell me what he earned, refused to let me work and gave me a pittance to feed, clothe and entertain all of us. My parents were bringing us food parcels as he was pleading poverty. Turns out, via the court documents, he was squirelling thousands away each month into another bank account.
Am I jealous? Of what? And of course the kids will miss this money. Going to a 10th of the maintenance I was receiving will affect them, I can barely afford to live as it is now! Mainly because I have no childcare, he refuses to have the kids so I can work and they think he's brilliant as he buys them all the toys they want when he sees them.

The problem is there's a big timing play here OP.

Company accounts and tax returns arent filed until several months after a year long period of account ends.

A company director can loan themselves the surplus cash, then can repay it in time to avoid paying tax, and give themselves a dividend. It maybe taxable income and relevant to CMS but the timing means that when they can access the cash, and when they actually own the income for tax/CMS purposes could be more than 2 years apart.

Dividends are not taken in to account by the CMS unless you request a variation on his income.
I have been through this and my ex did exactly as yours did. After requesting a variation the dividends were taken into account and eventually he had to pay the arrears.

I find it appalling that parents can and will do this to avoid paying for their own kids. I used to work in student finance and the number of parents who would only declare their P60 income in support of their kids' applications was unbelievable (part of the students living costs loan was based on parental income). They'd do like your ex, OP - PAYE themselves just enough to avoid paying tax and then take the rest in much lower taxed dividends. Maybe CMS should link their computers in with HMRC like student finance does; loads of parents would get caught out thst way having lied about their income for assessment purposes. Of course, if a parent is cheating the taxman then it's much harder. If your ex is doing this and you have evidence to show that, shop him.
I'd support any campaign to make sure parents can't hide income when it comes to being assessed in support of their kids.

loveacosynightin 😂😂😂😂😂 that's all really.

I’m shocked by this. Dividends are absolutely taxed and visible for an individual through self assessment and can’t see how CMS aren't able to access this information direct. This is wrong

I get there might be a fairly substantial delay in getting the details if they leave it till the very end of the tax year to take the dividend but it’s still a taxable income for them

I wouldn't support such s campaign.

@Viviennemary

I wouldn't support such s campaign.

What not declaring your true taxable income as per your signed self assessment to do your child out of money?

People can just request this variation so dividends ard taken into account. No need for a campaign. A campaign for what exactly. More likd a campaign for women to stop relying on men for financial security. That's the real problem. IMHO.

@Viviennemary

People can just request this variation so dividends ard taken into account. No need for a campaign. A campaign for what exactly. More likd a campaign for women to stop relying on men for financial security. That's the real problem. IMHO.

There is a massive difference between women relying on men for financial security and men paying a fair payment for their children. A person earning £60,000-100,000 shouldn't be paying CMS as if they are earning NMW.

To clarify, I wasn't saying that dividends aren't taxed, they're taxed against the individual who is in receipt of them via a SA tax return, but they're not a tax deductible expense for the business like PAYE payroll is. OP implied that tax was so low because monies were paid out as dividends. Dividends are paid out of retained earnings after tax. For a difference like that where profit appears higher than tax paid I would guess at an allowable capital expense for example the purchase of plant or machinery.

I thoroughly support CMS being calculated on all earning, and there are apparently mechanics in place to ensure this happens.Taxable earnings would be shown on a SA302 which I'm sure the court has the power to request. This would include PAYE income plus dividends, interest etc.

I was querying the amount of info the OP seems to have... this is not publicly available information...

@shhsecretsquirrel I've got his company information from Companies House and through information that my ex has told me via text. That they don't take dividends into account so they won't take into account the amount he actually earned. On his text messages to me he has admitted he is paying himself £35k. I suspect it's more than that as his last P60, which is ordered by court was for £57k and had been at that level for a number of years. He's refused to give me a P60 for the last couple of years and it has only been in the last couple of weeks that him having a company has come to light.

@ontheboardwalk - the problem for CMS is whether or not dividends are declared. If they're not how do CMS prove he had them and the amount?

@CMSdividend - before your Exp became the owner / director / sole employee of his own company what was his employment status prior to that? Was he self employed or employed?

@Hiphopboppertybop99 he was employed by the company that gives him his contracts now as he has the same customers. I suspect he is in violation of IR35 too.

@CMSdividend - so as an employee of a company it would have been very difficult to hide his actual earnings.

By setting up his own company, and working as a contractor he now has the freedom to control his earnings and how much he reports to HMRC. Hence the low salary and greater dividend payments which are standard practice for company directors.

Make CMS aware of what he has done, and also the appeal. Good luck OP.

@CMSdividend

Hi, have n/c as ex knows old username and posting in AIBU for traffic.

I'm trying to get some evidence together of parents that have evaded supporting their children financially through setting up as limited companies, paying themselves minimum wage and claiming the rest of his income dividends. His company (of which he is the only employee) made a £50k+ profit last year.
My ex has just done this, was earning £50k+, I was receiving approx £650 per month. Now it's gone down to £34 a week. I'm going to have to sell the house, of which he'll also receive 30% of the £250k equity. I am not eligible for a mortgage.
I know I can appeal and will, but my appeal is likely to be unsuccessful. I have searched the .gov website for petitions and can't find one.
So, before I launch into campaign mode I'd like to know how many others on here this affects and whether you would help support a campaign if I was to start one?

It's fairly common place ime.

Re the equity, that's still around 175k. In your shoes, though not ideal, I'd be looking at moving somewhere you can buy with that, even if not ideal. Otherwise you'll simply spend this and have nothing to show.

I used to be in the same situation. Now ex is genuinely "without income" - with a seven figure in recent inheritance though, so back to £7/week or whatever it was (he kindly paid for several years in advance).
One issue is, from my experience, when the dividends are not paid regularly. Could be large amounts, but if the payment patterns are infrequent / sporadic, then the income won't be imputed.

I get there might be a fairly substantial delay in getting the details if they leave it till the very end of the tax year to take the dividend but it’s still a taxable income for them
The test here is the regularity of income. Say, if the dividend was from a publicly traded company and they had a particularly fantastic year and passed profits to the shareholders, it would be unreasonable to assume that it would be a recurrent event. Contractors' dividends are treated pretty much the same.

@BusyLizzie61 £175k wouldn't get a 2 bed here unfortunately. I have considered moving away but would have to go at least a couple of hours away to do that.

Unless he’s committing MAJOR fraud all dividend payments are reported to HMRC and form part of SA and companies house returns

If this is the case I’d report him direct to HMRC as well as CMS

@FFSAllTheGoodOnesArereadyTaken

I'm not affected by this but would definitely support a campaign.

Its sickening how people manipulate the system to get around paying towards raising their own children. I know it's legal but setting up finances so that you can buy yourself a lovely lifestyle but pay the absolute minimum to your own children is absolutely disgusting and I think more should be done to a. Prevent it and b. Investigate it and c. Punish those who do it.

Me too.

Cunty men avoiding supporting their children. And some apologists on this thread, too

Did you get anyway with this at all? I’ve just found myself in the same boat

My dcs dad is also self employed and only has to pay £3.50 per week.
Everything in his partners name and pays himself barely anything. We have 3 dc together and even when we were together he was a bit of a Scrooge when he came to money but he never seen his dc without.

Since I ended it though he became awful, unfortunately for me we were not married so he walked away with everything I helped build.

It's criminal how they're allowed to get away with it!