Monday, June 11, 2007

Gross wait

I mentioned the publication of the Child Maintenance and Other Payments Bill in a post last week. I've now had a chance to look at it. There are a number of provisions that I will no doubt comment upon in due course, but for now I'll concentrate upon the proposed new basis for calculating maintenance liability. Instead of the old basis of the net income of the non-resident parent (NRP), it is proposed that in future gross income should be used - see section 16 and Schedule 4. The aim here seems to be to reduce the opportunities for that parent to 'play with the figures', and also to speed up assessment. This seems to me to be a very sensible proposal (I never thought I'd hear myself saying that), although whether it will result in unfairness to the paying parent remains to be seen, particularly where he or she has high pension contributions (which are currently taken into account when calculating net income).

Of course, using gross figures will mean that the percentages of income to be paid will have to be reduced. The 'basic rate' figures change from 15% to 12% for one qualifying child, from 20% to 16% for two and from 25% to 19% for three. The rates reduce still further (to 9%, 12% and 15%) if the NRP's gross weekly income exceeds £800, presumably to take into account higher rates of income tax. I've made some rough calculations and it seems to me that the new percentages will result in higher maintenance liability than under the present scheme, even assuming no pension contributions are paid by the NRP. If I'm right, then many NRP's are in for an anxious wait to see if the Bill makes it on to the statute book.

5 comments:

  1. ummmm what about for the self employed, we have to rely on self assessment being correct.

    This won't ever be investigated either (Sorry it does appear i have an answer for everything!)My ex husband declared that his net income was £14k for the year, now, living within the M25 with a 100%mortgage on a property in Wheathampstead costing (2001) £160k even 5 times that is no where near, and supporting 2 step children and a new wife.

    Self assessment is open to abuse if not investigated, and nor will it be!

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  2. I recall that I did consider mentioning the problem of ascertaining the true income of self-employed non-resident parents (something the CSA has never been able to get to grips with) when I wrote this post, but I thought it self-evident that the problem would remain irrespective of whether gross or net income is used, and I can't see that C-MEC will be in any better position to deal with it than the CSA.

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  3. sadly i find that the Government as a whole do not communicate within departments, inland revenue to talk to the csa, and vice versa, not even necessarily talk cross over with the flick of a computer switch. If someone commits tax or vat fraud the 'flying squad' (Fraud Dept) swoop immediately.
    The C-MEC will never tackle this head on.

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  4. Jon, Winchester26 August 2008 12:48

    I've said it before and I'll say it again - if only there was some government agency tasked with accurately assessing an individual's income over the year and deducting a proportion of that income. Perhaps if they took a strong interest in ensuring that no-one evaded that deduction, or failed to declare some of that income?

    Oh yes, that would be the Inland Revenue then.

    And the CSA costs how much each year?

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  5. Indeed. For some reason the Government has always shied away from using the Inland Revenue - perhaps the Inland Revenue don't want the job!

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