Does a Car Allowance Count as Income for Child Support?

The level of child support you pay is based on the income you earn. That’s pretty straightforward for your salary, but it gets a bit more complicated when it comes to other benefits such as private health insurance, pension contributions and a car allowance.

In this article we’ll explain what income and benefits are included in a calculation for child support, and where a car allowance fits into this equation. We’ll also explain the different ways a car benefit can be received. This is particularly important if you’re paying child maintenance, because a company car vs a car allowance are treated very differently from the perspective of Child Maintenance Services (CMS).

We’ll also explain what you can do if you believe that the amount of child maintenance you’re paying is too much, as there are ways to appeal the decision and have the details reviewed.

What Employee Benefits Count Towards Child Maintenance Payments?

Essentially any taxable income that you receive is used to assess the amount you need to pay in child support. This can be from employment or self-employment, but it also means that any taxable benefits you receive will also be included in the calculation for income. In short, this means that if you receive a cash car allowance each month that is taxed, it will be included as income in the calculation for child support.

So yes, a car allowance does count as income for child support.  This also means that any other benefit you receive as a taxable cash sum each month will also be included in the calculation for child support. This could be things like professional membership fees, accommodation allowances, holiday loadings and bonuses. 

Car Allowance vs Company Car

Because of the fact that a car allowance is a taxable benefit that is received as cash, it’s included in the calculations for child support. This shouldn’t be confused with a company car, where you are provided with a vehicle that you can use in the course of your day to day work. In this case, you aren’t receiving a taxable cash benefit, even though the end result is the same, you have a car you can use.

Company cars are becoming less popular because they tend to be less attractive tax wise for both you and your employer. With that said, they are still reasonably common. If you have the option to choose whether you take a company car or a car allowance, this could be a factor in that decision making process.

Does Mileage Allowance Count as Income for Child Support?

Whether you receive a car allowance, have a company car or have to use your personal car for work purposes, your company may have a policy on reimbursing your for the mileage you drive. This is generally based on an amount of money for each mile, and is designed to cover not just the cost of fuel, but also to compensate for the additional wear and tear and the need to replace things such as tyres sooner than usual.

You will usually need to keep a log book that tracks the mileage you drive for work purposes, and then claim this mileage allowance back from your company at regular intervals. This mileage reimbursement is paid back to you via your pay slip, but it is generally not taxable. This is because its a reimbursement for costs you’ve already incurred, rather than a cash benefit.

Because of this, mileage reimbursement generally isn’t taxable, and therefore it doesn't count as income for child support or maintenance payments. It’s always worth confirming with your HR or payroll department that it isn’t taxable in your case, on the off chance that there is some unusual arrangement in your contract.

How to Appeal Child Support Amount

If you feel that you’ve been assessed incorrectly and that you’re paying too much in Child Maintenance, you can appeal. The appeal process is known as mandatory reconsideration, and it means that the Child Maintenance Service need to look at your case again to make sure the right decision has been made. If you want to apply for mandatory reconsideration, you need to do it within a month of the initial decision that you disagree with.

If you’re still not happy after you’ve gone through the mandatory reconsideration process, you can take the appeal a step further to the Social Security and Child Support Tribunal. Again, this needs to be done within a month of receiving the outcome from the mandatory consideration from the Child Maintenance Service.

Summary

Any taxable cash benefit that you receive in your pay each month will count as income for child support and maintenance payments. This means that in almost every situation, a car allowance will be counted as income when it comes to calculating the child support you need to pay.

It’s important to understand exactly how the car benefit is being provided to you, as there are some instances where having a car paid for by your work doesn’t necessarily mean you have a car allowance built into your pay. For example, a company car that is owned and paid for by your company generally won’t be included in the calculation for child support, even if you’re also allowed personal use of it.