Deep dive · Updated 08/07/2026

Income: how the CMS gets your figures — and when it must not use them

Almost every disputed assessment comes down to the income figure. The rules on which figure the CMS must use, and when it must switch to a different one, are precise — and they are among the most commonly misapplied parts of the scheme.

Historic income: the default

The starting point is historic income: the paying parent's gross taxable income for the latest available complete tax year, supplied by HMRC. For employees this comes from PAYE data; for the self-employed, from the last self-assessment return. "Gross" means before income tax and National Insurance, but after relievable pension contributions. The weekly figure is the annual figure ÷ 365 × 7 (reg 35; DMG 18012), requested from HMRC no more than 30 days before the initial effective date or annual review (DMG 18013).

Current income: the exception with a 25% gate

The CMS must use current income instead where historic income is unavailable or nil, or where current income differs from historic income by at least 25%. Below that threshold, the historic figure stands even if it is genuinely wrong about your present earnings — the tolerance is deliberate policy to keep assessments stable.

The burden is on the parent asserting the change to evidence it. If you report a 25% drop and the CMS refuses to switch to current income, ask precisely which figures it compared and how — the comparison must be like-for-like weekly gross figures.

How caseworkers are told to handle 25% reports (DMG Vol 2, Ch 19)

• A reported change is a supersession application — it must produce a decision (grant or refusal), each carrying MR and appeal rights (DMG 19042).
• Decreases: the caseworker should check HMRC Real Time Information first; if RTI is insufficient, they must ask for employer evidence — and refuse the change only if evidence isn't provided (DMG 19044–19047).
• Increases: verbal evidence from the paying parent can be accepted (DMG 19048–19049).
• Receiving parents can trigger a check: where a receiving parent has reasonable grounds to believe income is 25%+ different, the caseworker should check RTI and, if needed, require evidence from the paying parent (DMG 19053–19057). If the paying parent fails to respond, the CMS can estimate income or impose a default decision (DMG 19058). A refusal to even check, where you have set out reasonable grounds, is challengeable.
• Nil historic income: if HMRC returns nil and current income is above nil, the 25% test is deemed met and current income must be used (reg 34(2A); DMG 18002).

Pension contributions

Pension saving reduces the income used in the formula. Occupational ("net pay") scheme contributions are usually already netted out of the HMRC figure. Personal and relief-at-source pension contributions often are not — the paying parent must tell the CMS and evidence them to get the deduction. Missed pension deductions are one of the most common calculation errors in both directions: paying parents overpaying because contributions were ignored, and receiving parents underpaid where excessive contributions go unchallenged. Disproportionate pension contributions can be attacked as diversion of income — see KW v SSWP [2017] UKUT 400 (AAC).

What the standard figure does not include

The standard calculation uses taxable earned income: employment, self-employment and occupational/private pension income. It does not automatically include:

• dividends (the classic company-director structure: small salary, large dividends);
• rental income and other property income;
• savings and investment interest;
• capital and assets, however large;
• a new partner's income (never counted);
• gambling winnings — even professional gambling income cannot be counted, in the main calculation or any variation, because it is not declared to HMRC (DMG 18010).

All but the last can be brought into the calculation — but only if the receiving parent applies for a variation. The CMS does not go looking on its own initiative. This asymmetry is one of the scheme's most criticised features: the House of Lords Public Services Committee concluded in October 2025 that the calculation "does not take into account the full scope of a parent's earnings".

Self-employment and directors: the honest and the not-so-honest

Self-assessment data lags. A newly self-employed paying parent may have no historic figure at all (leading to current-income or default decisions); an established one may be assessed on a bumper year long gone, or a lean year that flatters them. If you are the paying parent and your trading income collapses, report it with evidence and invoke the 25% rule. If you are the receiving parent facing an implausibly low figure from a visibly comfortable ex-partner, the tools are the unearned income, diversion and notional income from assets variation grounds — with the tribunal able to order disclosure the CMS never sought.