Avoiding spousal maintenance

[Schleich]

Hello,

I'm going through a separation at the moment, and we are trying to construct the financial settlement between us to be as fair and tax efficient as possible.

I am a relatively low earner, and would be entitled to a significant amount of universal credit - I have no savings or any other assets (nor does STBXDH) other than the family home.

I understand that child maintenance does not affect universal credit, but spousal maintenance does. Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit?

Also, STBXDH has suggested setting up a joint bank account (which only he will pay into as the high earner), which we are both able to use to pay for all costs relating to the children. Would this impact on universal credit? Does anyone see any issues with this?

Thanks!

It's usually considered beneficial to keep the kids in their home if possible.

And anyway, the home you live in is disregarded for benefit purposes - could be a million pound mansion I guess.

As someone who works in benefits I see a huge range of cases, some absolutely destitute and deserving and others less so. It's not my job to prevent access to benefits for anyone that's entitled to it. The legislation is there to ensure people are protected.

It's not there to prevent a sufficiently high earning parent from accessing private education for their children. It's not there to prevent a parent from funding their children's other expenses adequately. But because a number of parents do not meet their child maintenance obligations, the regulations stipulate that child maintenance is not taken into account when assessing a claimant's income.

@Atadaddicted

So people on UC shouldn’t

Go on holiday
Drink
Smoke
Socialise
Get a take away

Because “the tax payer” shouldn’t fund this kind of thing?

I didn’t say that.

The op is seeking advice on how to defraud the system.

That’s wrong.

I would be extremely concerned that he would just stop paying that amount of child maintenance. He’s saying he’ll pay £1000 a month, but they’ll be living with them 50% of the time, so presumably he doesn’t actually have to pay anything (am I right on that?).

I wonder if he’s making promises now as he’s essentially a nice bloke (I presume, though he could be horrible!?) but when you both come to buying/renting separate properties and really see how much the mortgage/rent and two lots of bills/council tax etc costs, he might well reconsider the school fees as well-simply because he won’t be able to fund two lots of everything on the same salary as before.

@Atadaddicted

So people on UC shouldn’t

Go on holiday
Drink
Smoke
Socialise
Get a take away

Because “the tax payer” shouldn’t fund this kind of thing?

I dont think the tax payer should pay for private schools or exotic holidays... do you?

OP is open about trying to defraud the system I understand that child maintenance does not affect universal credit, but spousal maintenance does. Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit? in case you didnt read that one

I agree with @MidnightCitrus

This is the comment I have issue with

Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit?

That’s fraud.

Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit?

I think this has been mentioned to some extent already (I only read OPs posts). Depriving yourself of income or capital in order to be eligible for universal credit is not allowed. The UC "decision maker" can assess your claim on what they call notional income and notional capital, the money and income they say you should have.

So they could argue that you should have spousal maintenance and it's your decision not to in order to get universal credit, and therefore your UC will be deducted for the spousal maintenance you should have.

If you get capital and spend it on private school fees, I reckon they're very likely to regard that as deprivation of capital.

PS: It's not fraud unless you're dishonest. It's just the government have thought of people "structuring their finances" to increase their benefits eligibility and they've closed that loophole.

@Mydogisthebestest

I agree with *@MidnightCitrus*

This is the comment I have issue with

Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit?

That’s fraud.

It's just good accounting

Avoidance vs evasion?

The word “artificially” is key, in my opinion.

If you get capital and spend it on private school fees, I reckon they're very likely to regard that as deprivation of capital.

Except in this case the dh is paying the school fees so deprivation of capital is irrelevant.

OP's arrangement is no more fraud than submitting your universal credit claim the day after you get paid.

Tax bills are kept artificially low by all kinds of perfectly legal mechanisms.

I don't think op's plan, as is, works because the child maintenance can be reduced at a later stage. Then again, would she actually get spousal maintenance anyway? But it seems perfectly acceptable for him to pay far more than the minimum cms calculations, plus for example school fees.

Aside fr the benefits debate OP have you sctly don’t the maths?
Your dh will take home a net pay of around 5k? Sounds a lot but what will his monthly mortgage be/rent? Bills? How much are the school fees each term/month?
On top of that he’s suggesting 1k child maintenance which would not be legally due and you also think he should pay spousal maintenance
How much is available ??

Some of these arguments are obsolete because OP has been receiving very poor advice. She seems to think she’s entitled to; possibly spousal maintenance, child maintenance despite 50:50 shared care, 70% of a £200k pension pot and is now querying entitlement to all the equity in the family home as opposed to half. That is ludicrous.
The STBEX earns £100k but is paying ? 4 sets of private school fees plus £1k a month even though he’ll have the children half the time.

@Mydogisthebestest

I think you may have forgotten what you posted.

* Why should i as a tax payer fund the op having a five bedroom house and kids in private school? *

A value judgement against what the OP intends to spend her benefit money on - her children’s private education.

My point is -
Do you feel the same re benefit claims spending money on a holiday? A take away? Wine?

@millymollymoomoo

Aside fr the benefits debate OP have you sctly don’t the maths? Your dh will take home a net pay of around 5k? Sounds a lot but what will his monthly mortgage be/rent? Bills? How much are the school fees each term/month? On top of that he’s suggesting 1k child maintenance which would not be legally due and you also think he should pay spousal maintenance How much is available ??

Yes, if you break the figures down like this, what does it actually look like on paper?

Out of his monthly take home pay, how much is left after 4 lots of school fees and £1000?

Even if he’s ‘only’ paying for 2 DC at school as OP said they paid for secondary, not primary, it’s around £6-9k + per year, per child.

[quote Schleich]@Kassandra1

You are deliberately misinterpreting what I've said - which is that keeping them in the same school FOR THEIR GCSEs when they have already started them is essential. They definitely deserve that.

Sky TV is a pure luxury.[/quote]
They may deserve it from you, the parents. They don't deserve it from the tax payer

@Haenow

Even if he’s ‘only’ paying for 2 DC at school as OP said they paid for secondary, not primary, it’s around £6-9k + per year, per child.

🤣😂 Try £6-10k per TERM. You’ll be nearer the mark.

Though of course nobody but the OP knows what she pays personally.

Its very disingenuous to say that it isn't cheating tax payers when UC have been introduced to tackle exactly that issue, it. people could continue to claim tax credits even when they received a large inheritance because TC legislation failed to take this into consideration amongst sadly a number of others.

Upping maintenance rather than getting spousal maintenance that would then prevent from claiming UC is yet another attempt to play the system, as simple as that.

I'm not sure why the ex would agree to.it though, there is nothing to gain from it from his perspective.

@dontdisturbmenow

Its very disingenuous to say that it isn't cheating tax payers when UC have been introduced to tackle exactly that issue, it. people could continue to claim tax credits even when they received a large inheritance because TC legislation failed to take this into consideration amongst sadly a number of others.

Upping maintenance rather than getting spousal maintenance that would then prevent from claiming UC is yet another attempt to play the system, as simple as that.

I'm not sure why the ex would agree to.it though, there is nothing to gain from it from his perspective.

I agree. To think people that are saying is perfectly fine, actually work there! Terrible

This is fine because that's the law.

When we start paying benefit based on people's various moral beliefs, where does that end.

If the law changes to take into account maintenance above that which is required by law, then yes. The OP will be entitled to less or nothing. Which is equally fine. Because that will be the law.
There are lots of anomalies in the benefit system. I had one friend who had 6properties in a very low rent area about 10 years ago. Because Tax credits did not take capital into account (either as the value of the asset or the notional value of the capital tied up in the properties) she was able to claim tax credits. As her income was nearly £2K a month. but her accountant could show that half of that was spent maintaining them..

Was that morally right ? No of course not. The capital value excluding her own home should have been incorporated into the calculation. However she was legally completely entitled.
The day that civil servants invent their own rules about who is and isn't entitled to tax payers money will be a very dark day. We are servants. We do what the government legislates. If the people don't like it they have an opportunity to vote for a different government to legislate differently. Not just to decide if their own backs who is or isn't 'entitled'

Hi OP,

Your situation is similar to what mine was so I'll share what I learned...

Ideally you stay in your current home as you will not be able to get a big enough mortgage on your salary even if you were FT on £35k, the most you could borrow is £130k with a £30k deposit its not enough. So unless you want to rent forever, stay put and fight for that. See if he is willing to take his share in the pensions instead, you dont need that now and you can sell the house when the kids leave for extra pension money.

Your ex will be able to get a mortgage soon enough. He will need to stay on your mortgage for now thou until you earn enough and have built up enough equity to remove him. Work it out and set a date, the house will be transferred to your name only at that point. Get the entire agreement signed off by the courts including that he will pay £1000 in child support till youngest leaves FT ed, and if anyone goes to the CMS then the amount is topped up by the difference (I have this it exists). This money should about cover your mortgage.

That will leave your xH with about £4500/mth which he can use to pay rent for a bit and save. School fees seem totally impossible to me, cant see how you'll manage that sorry.

If you go FT you'll get about £2200 a month which should cover all your bills, trains etc and allow you to save a bit for emergencies. Until you are FT you can claim UC.

Only way I can see it working, hth!

Im basing all that on your current house being worth about £300k, if its a lot more then you do need to sell and buy elsewhere - but it will be the same scenario with needing your ex on the mortgage for a few years until the banks will give you one on your own.

I echo @WellIWasInTheNeighbourhoo

What I will add though - get a forensic pension analysis (£1000 ish). Will give you precise indication of likely value of his pension.
Against which you work out appropriate equity / savings for you to keep if you don’t touch his pension

I agree you need some decent legal advice from someone who has all the figures. I had a forensic pension analysis to work out a fair division. I also get spousal maintenance, and I know many women who do. There's a massive disparity in earnings between my ex and me. Good legal advice will give you something to work with. Your plan to have more child maintenance so you can still claim UC is a very bad one!