Rental income and child maintenance

[CatLandlady]

Short version: Should rental income be taken into account when calculating child maintenance payments please?

Long version and background: My ex-partner and I have a child maintenance agreement between ourselves, i.e. not via CMS. He will be working away for at least 18 months (UK based for 6 months, then overseas for 12 months) so has rented out his house for the period that he’ll be away. His job and therefore salary have changed, so we are in the process of re-negotiating the amount of child maintenance that he provides for our sons. However, we are disagreeing about whether his rental income should be included in the calculation. Does anyone have experience of this please?

For info, we use the gov.uk online calculator to work out the monthly amount.

The rental income (before expenses) is in the region of £1000/1200pcm so will make a significant difference to the monthly amount.

I have emailed Citizens Advice and a solicitor for advice but not received replies so I am turning to mumsnet!

Thank you.

Presumably he’ll still have to pay housing costs/accommodation when he’s working away?

I don’t think so. When I rang CMS for advice they said it was only income that went via PAYE but I think you can try to submit a variance for the rental.

If he’s declaring the rental income properly ie through a Tax Return, then the profit from the rental will be considered income, you would have thought, but if he has a mortgage to pay and after expenses associated with renting, I doubt there wouldn’t be much profit left.

It's counted as income so yes

As someone pointed out the OP needs to consider costs because it is taxable income that counts. Over a certain limit he will pay tax on the profit not the income.

Approximate figures:
mortgage £1000
rent income £1200
letting agent fee £100
accomodation UK £500
accomodation overseas - zero

mortgage costs are not deductible for income tax, but letting agent fees are.

Accommodation UK includes all bills

No I wouldn’t include that. He’s not any better off.

Exactly!.

Why would you get cm on the whole amount?!. You should get it based on whatever profit he has after all costs! You are v greedy!

I’m not expecting to include all of it, just the profit ie the taxable bit. But that’s why I’m asking on here because I dont know the black and white legislation.

In fact I’m not EXPECTING it necessarily but that’s what THOUGHT I was entitled to. But fact checking myself here because I’m not 100% sure.

The rental income (before expenses) is in the region of £1000/1200pcm so will make a significant difference to the monthly amount.

You obviously were expecting the whole amount be added, otherwise how will it be a significant difference?. He actually has zero profit from renting his flat!

Does that mean before he pays for his Uk accommodation he will make £100 profit?

My according to HMRC. Because his mortgage is getting paid off, that counts as income or profit. Although it’s not going in his bank account now, it’s paying off his mortgage so he’ll gain in future. So HMRC count that as taxable income.

So, £1000 rent minus £100 fee would be £900 profit according to HMRC. Minus any other expenses like a plumber or something.

It’s fine if I’m wrong (it will be a relief not to think about it anymore tbh!) but I genuinely thought/think that child maintenance is based on taxable income. And that rental income is taxable income therefore should be included. But like everyone on here seems to be confirming - it’s a very grey area!

I double checked my statement earlier on the thread and pretty sure it’s correct. You need to ask for it to be included via a variation https://www.gov.uk/how-child-maintenance-is-worked-out/ask-other-income-expenses-included

Just realised that got the figures wrong in my last post: rent @£1100 minus fee @£100 = £1000 profit (minus plumbers etc)

@OneForTheRoadThen Thank you for the link :-) Yes that’s what I’ve read that makes me think that it should be included. But we haven’t gone through CMS, we just sort it between ourselves. So I have no mechanism to apply for a variation, but I do need something in black and white so I can negotiate with him.

He still has all the usual house running costs? And its not money YOU'RE entitled to..
it's money for your child....

Ah yes I reread and see it’s a private arrangement. Have you tried calling the CMS? I found them to be fairly helpful once they finally picked up the phone. The link definitely says rental income over £2.5k and doesn’t mention profit so I understand it as you are correct.

Wow, you are very morally wrong. You know he is using the money to pay his mortgage. Why shouldn't he pay his mortgage?. How would you feel if this was the other way around?. You feel he should pay you part of the money he is using to pay his mortgage because he is going to benefit from paying his mortgage later?

He is very likely become very hostile if you continue on this route. You already know he is no better off by renting his place but you still want more money. He is already losing money because he will be paying tax on the full rent.

About his “profit”, even if you take his UK accommodation cost into account, he’s still £800/900 better off per month because he’s paying £500 rent (instead of £1000 mortgage) and no bills. But I’m not sure that’s relevant because it’s all about taxable income, but it adds to my moral argument 😂

Oh ffs @femfemliciousOP’s ex is living abroad for 12 months, conveniently opting out of any semblance of parenting and is just liable for CMS calculated maintenance which, as anyone who has dealings with the system knows, is nowhere near the realistic cost of raising children. Let alone the added opportunity costs such as the effect of solo parenting on her career advancement. Luckily there is a formula on how maintenance is calculated and it’s got nothing to do with what you believe is ‘morally right’.

That doesn’t seem fair to count that in the child maintenance claim. I don’t know legally where it stands because how can paying a mortgage each month be classed as income, he had to take a big debt out to buy a house and is paying that back, like you say he doesn’t have that in his pocket now so how is it fair to take it from him when he hasn’t profited yet?