CHILD MAINTENANCE AND LTD Company’s

[JessicaRabbit6]

Please help me.. the internet is very vague. Partner runs a business..not sure what the turn over is. But I know it’s not the best business and it’s not doing brilliantly. The cash flow is terrible. he’s not the best with money or organisation. However, I want a divorce my dad has said he will pay my mortgage as I know he will stop paying it (DH) when I finally say bye bye. But I’m trying to work out how much CM I will be entitled too.. he takes home about £775-800 a week but his payslips say £1048 (for a month) that his accountant sends to him.. can anyone advise on LTD company’s and how CMS work it out please? I have 3 children. Thank you.

I would imagine his payslip relates to the salary he draws on a PAYE basis. Child maintenance will use this to base your payments on. You can then request a variation for unwanted income to consider any dividends that he may be drawing.

As your not sure, you can only base in the salaried amount for 3 children for now. (And that's what your initial calculation will be before variation) It will also depend if there is any overnight care as that will reduce his liability. Use the calculator online.

If he owns the LTD company then wait for the company to hit hard times and his salary reduce considerably as usually happens with CMS cases and difficult exes. CMS are useless as well so don't hold out much hope

He does own it.. he constantly says he can get away with not paying anything… which is prob correct if they base it on the paye payslip of £1000 a month 😂

Depends on how much of the business is cash. It is difficult to extract money out now in dividends as a tax benefit etc but he can just chose not to pay himself and leave the money in the company and not much CMS can do as it is a separate legal entity.

Most accountants will advise an owner of a Ltd Co to take a smaller payroll amount as paye, so as to pay less tax and ni, and then pay themselves a bigger dividend. Be warned as pp Marie says.

I doubt you will get very much OP , prob a pittance and not based on what he actually has coming in .

You have to tell CMS to also look at dividends.

No idea why the system is so toothless. HMRC get all the info but somehow CMS just look at PAYE unless told otherwise. It's a wildly misogynistic set up.

A Ltd Company is a legal entity in its own right. If he is drawing a salary, that is what is shown on his payslips and would be treated as expenses in the company's accounts in the same way as any other cost of running the business. If he is taking more than that out, then it is called drawings. If you look at the Companies House website, then you will be able to download the most recent sets of accounts, and that should have a figure on it which shows how much he has taken out of the business - it should be in the 'current assets' on the balance sheet, as technically he as an idividual owes the business that much. Any dividends the company pays to its shareholders are taxable income and should be included in his earnings for your purposes. The dividend figure paid in each year should be shown in the business accounts. If he owns the company and is the sole shareholder then that is proof really.

It is all fairly complex, and maybe you could enlist the help of an accountant yourself to look through the numbers and help you. A one-off consultancy appointment might cost you, but it could be worth it in the long run.

I bet DWP look at the Dividens for UC don’t they 😂 just a massive joke tbh

Exactly!!!

It shouldn't be hard for CMS to see what he has going through as dividends. Most ltd company owners will pay the minimum salary and the rest in dividends, it's (very slightly) more tax efficient.

Dividends are taken into account for means tested benefits, as they should be for child maintenance.

Brace yourself to get nothing at all if he has a ltd company. Bitter experience and £15k of owed CMS later...

My ex did this and paid himself minimum wage. I applied for a variation of income and they took his dividends into account and increased the amount. It took six months but was fairly simple, CMS dealt with it and then I was owed a substantial back payment.

I haven’t been successful at getting them to look at the money he is holding in the business though, he declares £39,000 every year, give or take (this includes dividends) and has done for seven years, despite the business turnover, assets, capital, shareholders funds etc. increasing hugely year on year.

In essence, he seems to be using his business as a savings account. The DC are teens so I am guessing he is holding on to it until he doesn't have to pay CMS and then he can withdraw it or sell the company. Along with huge pension contributions, company car etc. Oh, and frequent cash work as top up (building company)

I am going to apply again though!

thank you all for your replies. I’m glad I am not the only one in this situation and there are others for support ❤️😩

Why wouldn't they? It is a form of taxable income.

How is it misogynistic? Women can set their businesses up as limited companies as well as men.

In your circumstances your best option is a private arrangement. Consider all your assets including property and negotiate. Cms is unlikely to trace additional money especially if the company isn't that lucrative

As is for CMS but they don’t look into it unless you fight.

It is because they can see the PAYE element but you simply need to let them knkw there are dividends too because they can't guess.