Child maintenance, high earners and pension question

[Aeamathsguru]

Divorce is still being negotiated, but I expect to get child maintenance payments from dh, who earns just over 100k plus large bonuses. As a sahm, I will likely end up asset rich (owning a house) but income poor (part time self employed as caring for sen child).

Am I correct I thinking that child maintenance is calculated on stbx’s last tax return to hmrc? If so, I’ll be fine for a while as his last tax return to April 2021 was quite large. But (and I know I shouldn’t have) could a glimpse of his most recent payslip, and it seems that he is currently paying almost half of his income into his pension.

Does this reduce his child maintenance liability for the next tax year?

He will probably explain the huge pension payments as due to the fact that it looks likely that our joint pension pot will be split 50/50 in the divorce, which he sees as me taking all of his pension money :(

When I say ‘joint’ pension pot, this was our pot in the last quarter of 2021, when it was declared on form E. He’s clearly been adding to it massively (plus employer contribution, plus tax rebate) since then.

The CMS should check for pension contributions:
www.gov.uk/how-child-maintenance-is-worked-out

You are right. CMS is based on income earned after pension deductions but before tax and NI.

Also there is a maximum CM claim.

You could ask for one years spousal support. After 12 months they can take it back to court anyway so little point asking for longer than that.

Ensure you get a shot hot lawyer that has an excellent success rate at getting a good financial deal for someone in your circumstances - high earner ex, SAHM, SEN child.

My solicitor is saying not to go for spousal support, as stbx keeps threatening to leave his job.

So he could pay a small fortune into his pension, getting employer contributions and tax rebates on it - just to pretend he’s on 30k pa and pay lesson child maintenance? 😮

Lesson child maintenance = less child maintenance 🤨

The payslip I saw a glimpse of showed a pre-tax, ni income of 9.3k.

After deductions for tax, ni, pension, share scheme etc, his actual income was about 3.2k.

9.3k would put him on about 112k per annum gross.
After tax, ni and more normal pension contribution of 6% take home would be c5.kk

even without pension take home would be c5.85k net

these are the sort of figures you should base cms on really - not the 9k nor the 3k….

amthough there is an argument to say if he’s giving you pension share as part of settlement he will need to increase contributions to build it back up ….

Can only pay £40k into a pension pot each year before it's taxed.

Plus if his employer matches his contribution, that's about £20k he can squirrel away from his gross.

He can of course put more in, but he'll be taxed as if it were income.

What are your plans to increase your income? How severe /restrictive are your child’s needs?

This is why as much as possible in a clean break is recommended as he can't alter his future earnings to deliberately deprive you.

Honestly stop looking at him and start looking at yourself. Think about how you can earn more money to boost your child’s life

yes he might have to pay you £999 a month but that won’t go that far so sort yourself out!!!

I’m a divorce lawyer. Yes pension contributions are deducted before CMS is worked out on gross salary after pension deductions. Once the CMS have reassessed next year you can apply for a mandatory reconsideration (you must do this within 1 month of the decision) on the basis that he is excessively contributing to pension. Whether or not they accept that depends on quite a broad consideration:
CMS internal guidance here (this came from a FOI request in 2019 so may be out of date now)
www.whatdotheyknow.com/request/565189/response/1346846/attach/2/PLDMG%20Diversion%20of%20income%2013017.docx?cookie_passthrough=1

I would seek an undertaking about his maximum pension contributions as part of the agreement.

He isn’t being advised well as the pension share will be on the pension value at the time of implementation, which can be four months after final order & decree absolute even though you’ll be negotiating on the disclosed of the pension value.

@millymollymoomoo and @Quitelikeit thank you, I totally intend to ‘sort myself out’. My sen child has 5 years of education left, for which I need to do school runs, after school care and random days called into school to collect her/days t home for school refusal.

I just want to be able to manage for those 5 years, after which I hope my child will be independent enough to attend university or start a job (with support).

@Familylawso1icitor thank you. The offer my solicitor has suggested putting forward is a set amount of stbx’s pension, not a % of it. That is interesting to know that I could seek an undertaking as to the max pension contributions.

@alwaysmovingforwards do you know at what point the tax you pay on pension contributions outweighs the benefit of paying into it, when you earn over 100k?

As a high earner you are better to take this to court than use CMS - as there is a limit to what cms can award. They se cms as only part of what they factor in. I was awarded double CMS amount as judge looked at the sneaky things my exH was doing and said well if you can afford that you can afford to pay more maintenance Mr Tiani

The judge will award more than CMS as will include spousal support and will be able to see that he is paying in half his wages to pension to try to circumvent maintenance
My oh just show what he earned what pension contributions he made then and what he is doing now-

Judges do not like fathers being sneaky to try to reduce amount of money they pay to support their DCs and ex wives

@Tiani4 right now, we are still living in the marital home and it is a terrible atmosphere. It’s not good for either of us, or the children.

Can you take a CMS claim to court after you’ve agreed a financial split and moved into separate homes? Right now, moving out has to be my priority and my mental health will not cope with going to court, and the months it will take, whilst living in the same house.

@Aeamathsguru if total pension contribution of him + employer exceeds £40k then it's taxed as normal income with no relief.

You can go back 3 years and top up those pots to £40k if they weren't maxed though.

I don’t know why you take offence to my post
im asking what a court will ask
even with a sen child mums are expected to essentially try to support themselves and any court will try to understand what options you have vs limitations and tbf you did not provide any details to the severity which sen can mean a vast array of ranges

a court is unlikely to award you very high % of capital assets and higher cms and spousal and will look to ways for you and your ex to be able to achieve financial independence as quickly as possible

i dud not say that I thought he was right to put all that into pension either…. Courts don’t have power over child maintenance and anything here put into consent order can be amended after first 12 months - unless it’s a global maintenance order which includes spousal as well for a period of time

Pension sharing orders can only be expressed as a percentage when the court documents are drawn up, unless you are looking at offsetting for cash (lots of issues to be aware of if so, which I won’t go into here).

Be careful about spousal. It's regarded as income if you are claiming universal credit. Whereas cms is not. (You probably know that but just wanted to check.)

Loving the "sen mums are expected to work" thing. Funnily enough UC don't expect them to. My child needs 1:1 attention which makes before and after school care impossible. And school hour jobs are just that - jobs not careers.

I would assume that your ex is going try and pay you the minimum to support his kids.

Uc may not - but courts do and will look to try to see how that can be achieved

it may or may not be possible - no one here knows really. OP needs to understand what’s possible and not, and what things she’ll negotiate on in the discussions of % and settlements and ensure there’s some reality to it

whats your solicitor saying op?

Child Maint with 50/50 shared Custody,
recently split up and pay nearly £600 child maintenance to my X,
we both earn 50k each a year but as a father If i look after my 2 kids The same amout of time do i still need to pay child maintenance?

Bhppa - no if you have 50:50 no cms is due