Child Maintenance for Self-Employed Parents
How the CMS calculates maintenance when you're self-employed, a company director, or have variable income.
Quick Answer
For self-employed parents, the CMS uses your taxable income from your latest Self Assessment tax return (as reported to HMRC). This includes:
- Sole trader profits (after allowable expenses)
- Partnership income share
- Director's salary AND dividends
How Self-Employed Income is Assessed
The Child Maintenance Service (CMS) doesn't look at your business turnover or bank balance. Instead, they use data directly from HMRC based on your tax returns.
What Counts as Income
Sole Trader Profits
Your taxable profit after allowable business expenses
Partnership Income
Your share of partnership profits
Director's Salary
PAYE salary from your limited company
Dividends
Dividend income from your company shares
What Doesn't Count
Business Turnover
Your total sales/revenue is irrelevant - only taxable profit matters
Retained Profits
Money left in the business (not paid as salary/dividends) - though this can be challenged
Capital Assets
Business equipment, property, or vehicles
Important: Income Can Be Challenged
The receiving parent can ask the CMS to look at "additional income" if they believe you're keeping money in the business to reduce maintenance, or if your lifestyle doesn't match your declared income. This is called a "variation" and can include retained profits or diversion of income.
Limited Company Directors
If you run a limited company, the CMS counts both your salary AND dividends as income. A common strategy of paying yourself a small salary plus dividends doesn't reduce your child maintenance assessment.
Example: Company Director
Director pays themselves £12,570 salary + £40,000 dividends
- Total income for CMS: £52,570
- Weekly income: £1,011
- For 2 children: approx £161/week (£700/month)
Variable Income
Self-employed income often varies year to year. The CMS uses your most recent tax return, which can cause issues if:
- You had an unusually good or bad year
- Your income has changed significantly since your last return
- You've just started or closed a business
Income Change of 25%+
If your current income is 25% higher or lower than your last tax return, you can ask the CMS to reassess using your current income. You'll need to provide evidence like recent accounts or tax calculations.
Calculate Your Maintenance
Enter your taxable income (from your tax return) to see your estimated child maintenance.
Self-Employed FAQs
Can I reduce maintenance by keeping money in the business?
Technically, retained profits aren't counted. However, the other parent can apply for a "variation" if they believe you're artificially reducing your income. The CMS can then investigate.
What if I made a loss this year?
If your taxable income is zero or negative, you'd likely fall into the Nil Rate or Flat Rate band. However, the CMS may look at your lifestyle and assets if a loss seems inconsistent with your standard of living.
Do pension contributions reduce my income?
Yes, pension contributions are deducted before calculating maintenance. This applies whether you're employed or self-employed.
How often is my income reassessed?
The CMS automatically updates your assessment each year when new HMRC data becomes available (usually after you file your tax return). You can also request a review if your income changes by 25% or more.