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Stop The CSA Penalising Savers.

Comment 13th July 2010

Since the CSA was formed, they have used the Statutory Rate of Interest at 8% to assess how much income is earnt from savings that a non-resident parent has despite the fact that 2-3% is more realistic these days. Tax deductions on income from these savings is not taken into account either. So if a non-resident parent works hard, pays maintenance of 15% or more from his salary but still manages to save, he/she then ends up paying up to 60% of the income from his savings on top.

The Statutory Rate of Interest is a high draconian rate used by the Inland Revenue to punish late tax payers. So why is the CSA using a 'punishment' interest rate on non-resident parents?

It would be a simple matter to either 1) assess true income from savings based on a tax return, or 2) set a realistic rate of interest each tax year based say on average savings rates available.

Why does this matter?

Parents who are careful with money and save are being penalised.

It is wrong to use a 'punishment' rate of interest against parents who have done nothing wrong.

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