How To Understand The 25% Child Maintenance Rule You Need To Know This

Let's dive into the 25% rule regarding child maintenance calculations by the Child Maintenance Service (CMS) in the UK. Understanding this rule can simplify how changes in income affect your payments.

The 25% rule states that your income must increase or decrease by at least 25% within the year for the CMS to adjust your payments accordingly. It's crucial to note that this rule applies within the year and does not impact the annual review process.

Here's how it works:

If Person A's annual income rises from £10,000 to £12,000, which is less than a 25% increase, their CMS payments remain unchanged for the current year. The adjustment will reflect in the following year's payments.
Conversely, if Person B's income increases from £20,000 to £30,000, a 25% increase, CMS will recalculate their payments upward for the remainder of the year.
You do not need to notify CMS for income changes unless they exceed 25% of your annual earnings. This includes bonuses, temporary increases, or reductions in salary. For instance, if your income drops by more than 25%, CMS payments should decrease accordingly.

However, be cautious:

CMS may sometimes accept income changes below 25%, leading to unintended higher payments.
Changes should be measured over a 12-week period for CMS consideration. Short-term fluctuations may not require immediate reporting and can be addressed during the annual review.
Remember, avoid unnecessary calls to CMS for minor income changes. Instead, focus on significant changes that meet or exceed the 25% threshold to ensure accurate payment adjustments.

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Chapters
00:00 Child Maintenance 25% Rule
00:16 Why Is There A 25% Rule?
00:34 Examples of the 25% Rule
01:31 Loss of 2nd Job Or Salary Decrease
02:07 Recap Of The 25% Rule

Child Maintenance: Whats the 25% Rule?
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