|
If a non-resident parent is self-employed, they still should pay child maintenance in the normal way. We will work out the amount they should pay based on their weekly income and the number of children they are paying child maintenance for. The only difference is in the amount we count as income.
What does the CMED count as income for the self-employed?
Income from self-employment will be taxable profits after income tax, National Insurance contributions and the full amount of contributions to a personal pension scheme have been taken off.
Tax credits such as Working Families' Tax Credit or Disabled Person's Tax Credit will be treated as earnings where the non-resident parent is the main earner for the tax credit application.
If you also have a job we will include any earnings, including overtime. We will also take account of any amounts you receive from an occupational or personal pension.
When we work out your earnings, we use the figure which represents your taxable profits from self-employment as shown on the SA302 tax calculation notice that is issued to you by HM Revenue and Customs.
To calculate your earnings we need to see your SA302 tax calculation notice as provided by HM Revenue and Customs. If you do not have a copy of this document, you can get one from your local Hm Revenue and Customs centre.
If you have only recently started self-employed work and cannot provide an SA302 tax calculation notice, you can send us details of your gross receipts and expenses since you started. We count the following as income:
How does the CMED work out earnings from self-employment?
To work out the non-resident parent’s earnings, we normally use the total taxable profits for the most recent tax year shown on the tax calculation notice that HM Revenue & Customs sends them.
If the non-resident parent does not have have a tax calculation notice, they might be able to get a copy from HM Revenue & Customs.
However, there may be times when we cannot work out earnings from self-employment in this way. For example the non-resident parent has only recently started self-employed work and has not yet received a tax calculation notice.
If the tax calculation notice is not available, we use details of the gross income (all the money the business, rather than the non-resident parent, has earned). We then take away from the gross income:
- any reasonable expenses paid to run the business (not including capital expenditure or business entertainment expenses)
- VAT (value added tax)
- income tax
- National Insurance
- normally any money paid into a pension scheme, except when the pension is set up to pay off a mortgage. If this is the case, only 75% of the money paid into the pension scheme is taken away from the gross income.
Going self-employed
If a non-resident parent is self-employed, they still should pay child maintenance in the normal way. We will work out the amount they should pay based on their weekly income and the number of children they are paying child maintenance for.
Contact Us and tell us about the change to your circumstances
|
