CMS and Salary Sacrifice Schemes

[Daffodils2023]

Hi, can anyone help me on the tax efficient savings that companies offer their employees, particulary Car Salary Sacrifice? The reason I'm asking is my ex has a Salary Package of £85k but the Child Maintenance Service are only taking into consideration £71k, they apparently get their figures direct from HMRC so I am trying to work out if it is the Car Salary Sacrifice which is bringing down the taxable income figure with HMRC. He works for a large company on payroll so there isn't any self-assessment. All I can think of is that it is the Car that is billed on the Companies benefits blurb as being a "tax efficient savings scheme"..... Anyone up on tax and can understand whether this is what is happening here? Ive applied for a Variations on the grounds of "Additional Income" and "Diverted Income" but they've rejected it by saying that I havent provided enough evidence... I provided a copy of his salary package and benefits and they said they only get their figures from HMRC, but if its a tax efficient saving presumably it isn't evident in the HMRC figures?

Contributing 16% to his pension is the obvious one

If HMRC have that figure from his employer not much you can argue against sadly

It’s perfectly legitimate for him to have car and pension as Salary sacrifice - many companies have these standard scheme and cms is based on gross earnings less pensions

Not completely up to date but a chart showing what could be classed as "reasonable" contributions

@millymollymoomoo I havent said its not legitimate, the issue is the Child maintenance for the children has gone down significantly and it was a choice to change his two year old car to a brand new electric top of the range suv.....Its a question of whether anyone had experienced this with CMS and variations on the grounds of Diversion of Income - which this clearly is - he has form - many months of unpaid maintenance etc.

@wobytide wheres that from - what Ive got says they consider anything over 12% to be a possible diversion of income - but tbh its academic in this context as I know he doesn't contribute, its on autoenrolment, always has been, I know this man very well, he is not a financial planner.

My point is whether you like it or not it’s permitted within cms calculations so you won’t get a variation based on it

So let's say he can pay 12% into a pension. Then we're talking about where another 4.5% of his income has gone. For two children we are talking about less than £30 a month in maintenance.

I'd get over it and focus your attention on your own career rather than demeaning yourself by grasping at pennies from an ex to be brutally honest.

Hahaha @BetterFuture1985 good old Mumsnet always throws up these sort of comments. I’m not demeaning myself and I have a perfectly good job thanks but thanks for the careers advice!! He doesn’t pay 12% he pays nothing. I know this categorically. He has chosen to reduce child maintenance payments for his children. It’s diversion of income. It’s not pennies that have been reduced. Would you like the CMS calculation? Hahaha why even bother commenting if all you want to do is put someone down? Look in the mirror darling and ask yourself if you feel better from than crap? Why is that? I feel very sorry for people like you. Get a life and stop being one of those saddos or just one to harass strangers on social media. 😊

I think my ex is doing something similar - just changed to a top of the range hybrid electric SUV car.

We have a private arrangement rather than going through CMS.

I'm pretty sure he's getting large bonuses on top of his large salary too.

Was thinking of asking him for his p60 but it'll go down like a lead balloon.

Mine actively chose to have his children less but doesn't seem to want to pay CMS

where I work we don’t get a choice of how benefits are given - eg if I want pension it’s via the company scheme which is Salary sacrifice. So I choose to sacrifice 10% of my sanity, they pay directly into pension company and we both sane the tax and NI on it. I’m that case I wouldn’t agree it’s diversion of income

obvs we don’t know what schemes he has entitlement to but if they are legitimate part of his overall pay and benefits package he’s allowed to do them. We also can opt to do this for other parts of benefits package, whereas others are taxable benefits via P11d.

whether it’s fair, whether what you receive is fair, we can’t comment on and is not being asked but unlikely that you’ll prove diversion of income if it relates to such items imo

Sorry if you didn't like the answer but the brutal honest truth is you don't know whether he is paying into a pension hence your original question and whether he is or isn't now, he might in the future.

If you really want this £30 a month you need to pursue him to fill in a P11. No doubt he will start paying 12% into a pension - if he isn't already - once that's all done and dusted but knock yourself out.

You've had the same answers on all 3 of your threads now. It may well be the car reducing his taxable salary, but he can legitimately put additional money into his pension to reduce his salary so you really are looking at a potential difference of around 5%. On a salary of £80k that's £4k so less than £400 a month. The CMS payment would be about £50 or less. I think you need to ask yourself if it's really worth the hassle. Yes, it's annoying, yes he's choosing to reduce maintenance and no, he shouldn't be able to do that, some men are just selfish.

Yes I do know. 100% I know.

Well, there are much easier ways of making money than trying to extract anything extra out of the CMS but knock yourself out!

With auto-enrolment pensions, the employee contributes. The employee contributes a minimum of 5% and employer minimum of 3% so I imagine it's a mix of pension and the car scheme. I don't have any experience of CMS but I don't think there is much you can do about it as it's legitimate whether you like or not.

He doesn’t pay 12% he pays nothing

Howcome he’s paying nothing if the CMS are ‘only’ taking £71k into account?

@FloweryName look this isn’t a question about tax, I know he doesn’t contribute any extra than the basic automatic amount

question about pensions I meant. It’s about car salary sacrifice 👍

But on his wage you must already be getting a decent amount of maintenance from him, so why shouldn’t have a new car if he can afford it?

Nothing is preventing you going through the CMS if you think you will get more money.

However I know of blokes who have told their ex (or in one case exs) to do this, and the result is the ex was told the bloke should pay them less money than he was paying them.

OP you haven't said what job your ex does.

There are certain jobs were employees are expected to have a car as they have to travel to different sites/places in the course of their work. Even if they only go to a different site/place of work once a month.

When I had to travel to work I used my own car which was older than 3 years old. However due to the age of my car I could only use it when traveling by train was not viable.

Should say "When I had to travel for work"

CMS do state that they frown on excessive use of these schemes to avoid paying cm though, and will investigate where there is evidence.

I don’t think the OP should be getting such a hard time here; I’ve looked into these car salary sacrifice schemes and they can significantly reduce taxable income (particularly for higher rate tax payers). I’m not sure that CMS was considering these schemes
when the changes to rates were made along with the change to gross from net. Some of these cars can have a salary sacrifice of more than £1,000 pcm. A significant income reduction, if you also take into account that pensions contributions aren’t limited and it makes sense to divert income to pension as a higher rate tax payer.

To understand the tax implications, look at something like Onto. These schemes are completely different from defined benefit company cars.